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                                                        PSEG Exhibit No. 10a(21)
                                                       PSE&G Exhibit No. 10a(17)
                                                       Power Exhibit No. 10a(15)
                                                    Holdings Exhibit No. 10a(14)

                  Public Service Enterprise Group Incorporated
                          2004 Long-Term Incentive Plan

1. Purposes.

The purposes of the Plan are to promote the growth and profitability of the
Company and its Subsidiaries by enabling them to attract and retain the best
available personnel for positions of substantial responsibility; to motivate
Participants, by means of appropriate incentives, to achieve long-range goals;
to provide incentive compensation opportunities that are competitive with those
of other similar companies; and to align Participants' interests with those of
the Company's shareholders and thereby promote the long-term financial interest
of the Company and its Subsidiaries, including the growth in value of the
Company's equity and enhancement of long-term shareholder return.

2. Effective Date.

The Plan shall be effective as of April 20, 2004, if it is approved by vote of
the holders of Common Stock of the Company at the 2004 Annual Meeting of
Stockholders. The Plan shall have a term of ten years from its Effective Date.
In the event of Plan termination or expiration, any then-outstanding Award shall
remain in effect pursuant to the terms of its Award Grant. On and after the
Effective Date, no Options or other awards shall be granted under any of the
Prior Plans.

3. Definitions.

Capitalized terms used in this Plan have the meanings specified in this Section
3:

     "Award" means a grant to a Participant of Options, Stock Appreciation
     Rights, Restricted Stock, Stock Units, Performance Shares, Cash Awards or
     any combination thereof.

     "Award Grant" means the written notification or agreement confirming an
     Award and setting forth the terms and conditions thereof.

     "Board of Directors" means the Board of Directors of the Company and, when
     used in the context or actions taken or authorized to be taken by the Board
     of Directors, means not less than a quorum of the whole Board of Directors
     of the Company.

     "Cash Award" means the right to receive a Performance Award denominated in
     cash with the eventual payment amount subject to achievement of goals
     relating to specified




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     Performance Measures and subject to such other restrictions and conditions
     as may be established by the Committee.

     "Cause" means an act of dishonesty, moral turpitude or an intentional or
     grossly negligent act, in each case, detrimental to the best interests of
     the Company or a Subsidiary, including violation of the Company's Standards
     of Integrity, as determined by the Committee.

     "Change in Control" means the occurrence of any of the following events:

          (1)  any "Person" (within the meaning of Section 13(d) of the Exchange
               Act) 'is or becomes the beneficial owner within the meaning of
               Rule l3d-3 under the Exchange Act (a "Beneficial Owner"),
               directly or indirectly, of securities of the Company (not
               including in the securities beneficially owned by such Person any
               securities acquired directly from the Company or its affiliates)
               representing 25% or more of the combined voting power of the
               Company's then outstanding securities, excluding any Person who
               becomes such a Beneficial Owner in connection with a transaction
               described in clause (A) of paragraph (3) below; or

          (2)  the following individuals cease for any reason to constitute a
               majority of the number of directors then serving: individuals
               who, on April 21, 2004, constitute the Board of Directors and any
               new director (other than a director whose initial assumption of
               office is in connection with an actual or threatened election
               contest, including but not limited to a consent solicitation,
               relating to the election of directors of the Company) whose
               appointment or election by the Board of Directors or nomination
               for election by the Company's shareholders was approved or
               recommended by a vote of at least two-thirds (2/3) of the
               directors then still in office who either were directors on April
               21, 2004 or whose appointment, election or nomination for
               election was previously so approved or recommended; or

          (3)  there is consummated a merger or consolidation of the Company or
               any direct or indirect wholly owned Subsidiary of the Company
               with any other corporation, other than (A) a merger or
               consolidation which would result in the voting securities of the
               Company outstanding immediately prior to such merger or
               consolidation continuing to represent (either by remaining
               outstanding or by being converted into voting securities of the
               surviving entity or any parent thereof), in combination with the
               ownership of any trustee or other fiduciary holding securities
               under an employee benefit plan of the Company or any Subsidiary ,
               at least 75% of the combined voting power of the securities of
               the Company or such surviving entity or any parent thereof
               outstanding immediately after such merger or consolidation, or
               (B) a merger or consolidation effected to implement a
               recapitalization of the Company (or similar transaction) in which
               no Person is or becomes




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               the Beneficial Owner, directly or indirectly, of securities of
               the Company representing 25% or more of the combined voting power
               of the Company's then outstanding securities; or

          (4)  the shareholders of the Company approve a plan of complete
               liquidation or dissolution of the Company or there is consummated
               an agreement for the sale or disposition by the Company of all or
               substantially all of the Company's assets, other than a sale or
               disposition by the Company of all or substantially all of the
               Company's assets to an entity, at least 75% of the combined
               voting power of the voting securities of which is owned by
               shareholders of the Company in substantially the same proportions
               as their ownership of the Company immediately prior to such sale.

     Notwithstanding the foregoing subparagraphs (1), (2), (3) and (4), a
     "Change in Control" shall not be deemed to have occurred by virtue of the
     consummation of any transaction or series of integrated transactions
     immediately following which the record holders of the Common Stock
     immediately prior to such transaction or series of transactions continue to
     have substantially the same proportionate ownership in an entity which owns
     all or substantially all of the assets of the Company immediately following
     such transaction or series of transactions.

     "Code" means the Internal Revenue Code of 1986, as amended.

     "Committee" means the Organization and Compensation Committee of the Board
     of Directors described in Section 4, or any committee or other person or
     persons designated by the Board of Directors as successor to the powers and
     duties of the Organization and Compensation Committee as described in
     Section 4.

     "Common Stock" means the Company's authorized Common Stock, no par value,
     except as this definition may be modified as provided in Section 13.

     "Company" means Public Service Enterprise Group Incorporated, a New Jersey
     corporation, or any successor thereto.

     "Covered Employee" means a person defined as such in Code section 162(m)(3)
     and regulations thereunder.

     "Date of Termination" means the first day occurring on or after the date or
     grant of an Award on which the Participant is not performing services as an
     Employee for the Company or any Subsidiary, regardless of the reason for
     cessation of services; provided that a cessation of services shall not be
     deemed to occur by reason of a transfer of a Participant between the
     Company and a Subsidiary or between two Subsidiaries; and further provided
     that a Participant's services shall not be considered terminated while the
     Participant is on an approved leave of absence from the Company or a
     Subsidiary. Unless determined otherwise by the Committee, if, as a result
     of a sale or other transaction, the




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                                       4


     organization for which a Participant is performing services as an Employee
     ceases to be the Company or a Subsidiary and the Participant is not, at the
     end of the 30-day period following the transaction, performing services as
     an Employee for the Company or an organization that is then a Subsidiary,
     then the occurrence of such transaction shall be treated as the
     Participant's Date of Termination.

     "Director" means any member of the Board of Directors who is not an
     Employee.

     "Disability" shall have the meaning ascribed to such term in the Company's
     Long-Term Disability Plan. For the purposes of this Plan, the question
     whether a Participant's condition shall be considered a Disability shall be
     determined in each case by the Committee and such determination by the
     Committee shall be final.

     "Effective Date" shall have the meaning set forth in Section 2.

     "Employee" means any employee of the Company or a Subsidiary who is
     receiving remuneration for personal services rendered to the Company or
     Subsidiary, including any such person who is an officer of the Company or
     Subsidiary, other than (1) solely as a director of the Company or a
     Subsidiary, (2) as a consultant, (3) as an independent contractor, (4) as
     an individual who is a "leased employee" within the meaning of Code section
     414(n), or (5) any other individual engaged by the Company or Subsidiary in
     a relationship that the Company characterizes as other than an employment
     relationship or who has waived his rights to coverage as an employee
     (regardless of whether a determination is made by the Internal Revenue
     Service or other governmental agency or court after the individual is
     engaged to perform such services that the individual is an employee of the
     Company or Subsidiary for the purposes of the Code or otherwise).

     "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     "Exercise Period" means the period from the date of grant of an Option or
     Stock Appreciation Right to the Expiration Date of such Option or Stock
     Appreciation Right.

     "Exercise Price" means the price established by the Committee (or
     determined according to a method established by the Committee) at the time
     an Option is granted and shall not be less than 100% of the Fair Market
     Value of a share of Common Stock on the date of grant of the Option.

     "Expiration Date" means, with respect to an Option or Stock Appreciation
     Right, the date specified in the Award Grant after which such Option or
     Stock Appreciation Right may not be exercised; provided that the Expiration
     Date shall not be later than the earliest to occur of:

     (i)  the ten-year anniversary of the date of grant;




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     (ii)  if the Participant's Date of Termination occurs by reason of
           Retirement, death or Disability, the three-year anniversary of such
           Date of Termination;

    (iii)  if the Participant's Date of Termination occurs by reason of
           involuntary termination without Cause, the 90th day after the Date of
           Termination;

     (iv)  if the Participant's Date of Termination occurs by reason of
           involuntary termination for Cause, the Date of Termination;

      (v)  if the Participant's Date of Termination occurs voluntarily or for
           any other reason not described above, the Date of Termination.

     The Committee in its sole discretion may establish an Expiration Date later
     than as described above, but not later than the ten-year anniversary of the
     date of grant. Notwithstanding the foregoing, if the Participant's Date of
     Termination occurs by reason of death or Disability or if death or
     Disability of the Participant occurs after Retirement or involuntary
     termination without Cause and before the otherwise applicable Expiration
     Date, the Expiration Date for a Non-Statutory Option or a Stock
     Appreciation Right which was exercisable as of the date of death or
     Disability or which becomes exercisable by reason of death or Disability
     shall not be earlier than the first anniversary of the date of Date of
     Termination.

     "Fair Market Value" as of any specified date means the closing sale price
     of the Common Stock on the New York Stock Exchange--Composite Tape on such
     date or, if there are no sales on such date, on the next preceding day on
     which there are sales. If the shares are not then listed on the NYSE, and
     if the shares of Common Stock are then listed on any other national
     securities exchange or traded on the over-the-counter market, the fair
     market value shall be the closing price on such exchange or on the NASDAQ
     National Market System or the mean of the closing bid and asked prices of
     the shares of Common Stock on the over-the-counter market, as reported by
     the NASDAQ, the National Association of Securities Dealers OTC Bulletin
     Board or the National Quotation Bureau, Inc., as the case may be, on such
     date or, if there is no closing price or bid or asked price on that day,
     the closing price or mean of the closing bid and asked prices on the most
     recent day preceding such date for which such prices are available.

     "Incentive Option" means an Option which is an "incentive stock option" as
     defined in Code section 422.

     "Non-Statutory Option" means an Option which is not intended to qualify as
     an Incentive Option as defined above.

     "NYSE" means the New York Stock Exchange.

     "Option" means an Incentive Option or a Non-Statutory Option granted by the
     Company pursuant to the Plan to purchase shares of Common Stock at an
     Exercise Price established by the Committee.




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                                       6


     "Participant" means an Employee selected by the Committee to receive an
     Award. The term shall include any transferee or transferees of any person
     who has received an Award to the extent the transfer is permitted by the
     Plan and the applicable Award Grant.

     "Performance Award"' means an Award of Performance Shares and/or a Cash
     Award.

     "Performance Goal" means a target based on Performance Measures that is
     established by the Committee in connection with a Performance Award;
     Performance Goals may be established on a corporate-wide basis or with
     respect to one or more business units, divisions, or Subsidiaries, and may
     be in either absolute terms or relative to the performance of one or more
     comparable companies or an index covering multiple companies.

     "Performance Measures" means criteria established by the Committee relating
     to any of the following: revenue; earnings before interest, taxes,
     depreciation and amortization (EBITDA); operating income; pre- or after-tax
     income; cash flow; cash flow per share; net earnings; earnings per share;
     return on equity; return on invested capital; return on assets; economic
     value added (or an equivalent metric); share price performance; total
     shareholder return; improvement in or attainment of expense levels;
     improvement in or attainment of working capital levels; safety performance;
     OSHA recordable rate; lost time accident rate; forced outage rate; nuclear
     capacity factor; INPO rating; availability factor; customer average
     interruption duration index (CAIDI); system average interruption frequency
     index (SAIFI); or leak rate per mile. Performance Measures may be applied
     by excluding the impact of charges for restructurings, discontinued
     operations, extraordinary items, and other unusual or non-recurring items,
     and the cumulative effects of accounting changes, each as defined by
     generally accepted accounting principles.

     "Performance Share" means a grant of shares of Common Stock which is
     contingent on achievement of Performance Goals and satisfaction of such
     other restrictions and conditions as may be established by the Committee.

     "Plan" means this Public Service Enterprise Group Incorporated 2004
     Long-Term Incentive Plan.

     "Prior Plans" mean the Public Service Enterprise Group Incorporated 1989
     Long-Term Incentive Plan and Public Service Enterprise Group Incoporated
     2001 Long-Term Incentive Plan.

     "Restricted Stock" means a grant of shares of Common Stock subject to
     transfer restrictions and a risk of forfeiture or other restrictions that
     will lapse upon the completion of a period of service by the Participant,
     or achievement of other objectives,including Performance Goals, as
     determined by the Committee. Subject to any such forfieture, the
     Participant shall be currently entitled to dividends on such shares and
     shall be entitled to vote such shares.




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                                       7


     "Restricted Stock Unit" means a grant of a Stock Unit which is subject to
     transfer restrictions and a risk of forfeiture or other restrictions that
     will lapse upon the completion of service by the Participant, or
     achievement of other objectives, as determined by the Committee.

     "Retirement" means cessation of services as an Employee for the Company or
     a Subsidiary by reason of retirement under the provisions of any formal
     retirement plan of the Company or Subsidiary.

     "Stock Appreciation Right" means a grant of an award that will enable the
     Participant to receive shares of Common Stock or cash equal to the
     appreciation in value, if any, of the Common Stock between the the Fair
     Market Value of the Common Stock on date the Stock Appreciation Right is
     granted and the Fair Market Value of the Common Stock on a future exercise
     date.

     "Stock Unit" means a right to receive shares of Common Stock in the future.

     "Subsidiary" means any corporation, limited liability company, partnership,
     joint venture or other entity during any period in which at least a fifty
     percent voting or profits interest is owned, directly or indirectly, by the
     Company (or by any entity that is a successor to the Company), and any
     other business venture designated by the Committee in which the Company (or
     any entity that is a successor to the Company) has a significant interest,
     as determined in the discretion of the Committee.

     "Successor" means the person or persons entitled in lieu of the Participant
     to receive any shares of Common Stock or other benefits under the Plan by
     reason of a beneficiary designation, will, laws of intestacy, or family
     assignments as permitted under the Plan. The Successor of a deceased
     Participant shall be the person or persons entitled to do so under a
     beneficiary designation in accordance with Section 11or, if none, under the
     Participant's will or, if the Participant shall have failed to designate a
     beneficiary or make testamentary disposition of such Awards or shall have
     died intestate, by the Participant's legal representative or
     representatives.

4. Administration.

The Plan shall be administered by the Organization and Compensation Committee of
the Board of Directors which shall consist of not less than three Directors of
the Company appointed by the Board of Directors. No person shall be eligible or
continue to serve as a member of such




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                                       8


Committee unless such person is an "outside director" within the meaning of
regulations under Code section 162(m) and a "non-employee director" within the
meaning of Exchange Act Rule 16b-3.

The Committee shall keep minutes of its meetings. One-third of the entire
Committee, or two members, whichever is greater, shall constitute a quorum
thereof and the acts of a majority of the members present at any meeting of the
Committee at which a quorum is present, or acts approved in writing by the
entire Committee, shall be the acts of the Committee.

Within the limits of the express provisions of the Plan, the Committee shall
have the authority, subject to such orders or resolutions, not inconsistent with
the provisions of the Plan, as may from time to time be issued or adopted by the
Board of Directors, in its discretion to determine the individuals to whom, and
the time or times at which, Awards shall be granted, the type of Award grants,
the number of shares of Common Stock to be subject to each Award, the
limitations, restrictions and conditions applicable to each Award grant, the
terms and provisions of agreements that may be entered into in connection with
Award grants (which need not be identical), to interpret the Plan, to prescribe,
amend and rescind rules and regulations relating to the Plan and to make all
other determinations and take all other actions necessary or advisable for the
administration of the Plan.

In making its determinations relating to Award grants, the Committee may consult
with the Chief Executive Officer of the Company and may take into account the
recommendations of the Chief Executive Officer with respect to grants made to
other Employees. The Committee may also take into account the nature of the
services rendered by such individuals, their present and potential contributions
to the Company's success and such other factors as the Committee, in its
discretion, shall deem relevant.

The Committee's determinations on the matters regarding this Plan (including
matters referred to in this Section 4) shall be conclusive and shall be binding
on the Company, its Stockholders, its Affiliates, all Participants, all other
Employees and all other persons. Except to the extent prohibited by applicable
law or the applicable NYSE rules, the Committee may allocate all or any portion
of its responsibilities and powers to any one or more of its members and may
delegate all or any part of its responsibilities and powers to the Chief
Executive Officer of the Company or a committee of officers of the Company,
except with respect to Awards to any Covered Employee or to an officer or other
person subject to Section 16 of the Exchange Act. Any such allocation or
delegation may be revised or revoked by the Committee at any time.

5. Eligibility.

Subject to the provisions of the Plan, the Committee shall determine and
designate, from time to time, those Employees who will be granted one or more
Awards under the Plan, and who thereby will become "Participants" in the Plan.




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                                       9


     (A)  In determining eligibility to receive an Award, as well as in
          determining the type and amount of the Award to any Participant, the
          Committee shall consider the position and responsibilities of the
          Employee being considered, the nature and value to the Company or a
          Subsidiary of such Employee's services and accomplishments, such
          Employee's present and potential contribution to the success of the
          Company or its Subsidiaries and such other factors as the Committee
          may deem relevant.

     (B)  The Plan does not constitute a contract of employment or for provision
          of other services, and selection as a Participant will not give any
          Participant or other individual the right to be retained in the employ
          of or continue to provide services to the Company or any Subsidiary or
          give any Participant or other individual any right or claim to any
          benefit under the Plan, unless such right or claim has specifically
          accrued under the terms of the Plan, nor shall the Plan in any way
          interfere with the right of the Company or any Subsidiary to terminate
          the employment or services of any Participant or other individual at
          any time.

     (C)  Neither a Participant nor any other person shall, by reason of
          participation in the Plan, acquire any right in or title to any
          assets, funds or property of the Company or any Subsidiary whatsoever,
          including, without limitation, any specific funds, assets or other
          property which the Company or any Subsidiary, in its sole discretion,
          may set aside in anticipation of a liability under the Plan. A
          Participant shall have only a contractual right to the Common Stock or
          amounts, if any, payable under the Plan, unsecured by any assets of
          the Company or any Subsidiary, and nothing contained in the Plan shall
          constitute a guarantee that the assets of the Company or any
          Subsidiary shall be sufficient to pay any benefits to any person.

     (D)  Awards need not be uniform among Participants. The receipt of an Award
          by a Participant shall not entitle that Participant to receive an
          Award in the future.

6. Shares Available.

The type and number of shares of Common Stock for which Awards may be granted
under the Plan shall be determined in accordance with this Section 6:

     (A)  The shares of Common Stock with respect to which Awards may be made
          under the Plan shall be shares authorized but unissued or currently
          held or shares reacquired by the Company and held as treasury shares,
          including shares purchased in the open market or in private
          transactions, all at the time of the Award.

     (B)  Subject to adjustment as provided in Section 13 herein, the maximum
          number of shares of Common Stock available for issuance to
          Participants under the Plan (the "Share Authorization") shall be the
          12,975,150 authorized shares of Common Stock not issued or subject to
          outstanding awards under the Prior Plans as of the Effective




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                                       10


          Date and (b) any shares of Common Stock subject to the 8,864,265
          outstanding awards as of the Effective Date under the Prior Plans that
          on or after the Effective Date cease for any reason to be subject to
          such awards (other than by reason of exercise or settlement of the
          awards to the extent they are exercised for or settled in vested and
          nonforfeitable shares), up to an aggregate maximum of 20,000,000
          shares of Common Stock.

     (C)  Subject to Section 13, the following additional maximums are imposed
          under the Plan:

          (1)  The maximum number of shares of Common Stock that may be issued
               by Options intended to be Incentive Options shall be one million
               (1,000,000) shares.

          (2)  The maximum number of shares of Common Stock that may be issued
               by Options that are not intended to be Incentive Options shall
               be, in the aggregate, fifty percent (50%) of the total shares
               reserved for Awards pursuant to paragraph (B) above.

          (3)  The maximum number of shares of Common Stock that may be issued
               in conjunction with Awards granted pursuant to Section 9
               (relating to Other Stock Awards) and Section 10 (relating to
               Performance Shares) shall be, in the aggregate, fifty percent
               (50%) of the total shares reserved for Awards pursuant to
               paragraph (B) above.

          (4)  The maximum number of shares that may be covered by Awards
               granted to any one individual pursuant to this Plan shall be one
               million (1,000,000) shares during any 36 month period.

          (5)  For Cash Awards that are intended to be "performance-based
               compensation" (within the meaning of regulations under Code
               section 162(m)), the maximum Awards payable in cash to any one
               individual for a 36-month performance period shall not exceed ten
               million dollars ($10,000,000). Such maximum shall be reduced
               proportionately in the case of a performance period of less than
               36 months and shall be increased proportionately for a
               performance period of longer than 36 months (but no further
               adjustment shall be made in the case of a performance period of
               greater than 60 months). If, after an amount has been earned with
               respect to a Cash Award, the delivery of such amount is deferred
               pursuant to Section 7(B), any additional amount attributable to
               earnings during the deferral period shall be disregarded for
               purposes of this limitation.

     (D)  Shares of Common Stock covered by an Award shall only be counted as
          used to the extent they are actually issued and delivered to a
          Participant, or, if permitted by the Committee, a Participant's
          designated transferee. Any shares of Common Stock related to Awards
          which terminate by expiration, forfeiture, cancellation, or otherwise
          without the issuance, are settled in cash in lieu of shares, or are




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                                       11


          exchanged with the Committee's permission, prior to the issuance of
          the Common Stock, for Awards not involving shares of Common Stock,
          shall be available again for grant under the Plan. Moreover, if the
          Exercise Price of any Option granted under the Plan or the tax
          withholding requirements with respect to any Award granted under the
          Plan are satisfied by tendering shares of Common Stock to the Company
          (by either actual delivery or by attestation), or if an SAR is
          exercised, only the number of shares of Common Stock issued, net of
          the shares tendered, if any, will be deemed delivered for purposes of
          determining the maximum number of shares of Common Stock available for
          delivery under the Plan. The maximum number of shares of Common Stock
          available for issuance under the Plan shall not be reduced to reflect
          any dividends or dividend equivalents that are reinvested into
          additional shares or credited as additional Restricted Stock,
          Restricted Stock Units, Performance Shares, or Other Stock-Based
          Awards.

7.  Awards.

The Committee shall have full and complete authority, in its discretion, subject
to the provisions of the Plan, to grant Awards to Participants consisting of
Options, Stock Appreciation Rights, Restricted Stock, Stock Units, Performance
Shares, Cash Awards or any combination thereof, as more fully described in
Sections 8 through10, subject to such terms and conditions as the Committee
deems appropriate. Awards may be granted singly, in combination or in tandem so
that the settlement or payment of one automatically reduces or cancels the
other. Awards may also be made in combination or in tandem with, in replacement
of, as alternatives to, or as the payment form for, grants or rights under any
other compensation plan of the Company or any Subsidiary, including the plan of
any acquired entity. The Committee may permit or require that any Award be
prorated to the date of any termination of employment.

     (A)  Dividends and Dividend Equivalents

          The Committee may provide that Awards denominated in Common Stock earn
          dividends or dividend equivalents. Such dividend equivalents may be
          paid currently in cash or shares of Common Stock or may be credited to
          an account established by the Committee under the Plan in the name of
          the Participant. In addition, dividends or dividend equivalents paid
          on outstanding awards or issued shares may be credited to such account
          rather than paid currently. Any crediting of dividends or dividend
          equivalents may be subject to such restrictions and conditions as the
          Committee may establish, including reinvestment in additional shares
          or share equivalents.

     (B)  Deferrals

          The Committee may require or permit participants to elect to defer the
          issuance of shares or the settlement of awards in cash under such
          rules and procedures as it may establish under the Plan. It may also
          provide that deferred settlements include the payment or crediting of
          interest on the deferral amounts, conversion of




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                                       12


          deferred amounts into deferred Common Stock equivalents, or the
          payment or crediting of dividend equivalents on deferred settlements
          denominated in shares.

     (C)  Settlements

          Settlement of Awards may be in the form of cash, shares of Common
          Stock, other Awards, or in such combinations thereof as the Committee
          shall determine at the time of grant, and with such restrictions as it
          may impose.

8. Options and Stock Appreciation Rights.

The Committee may grant Options containing such terms and conditions as shall be
requisite, in the judgment of the Committee, to constitute either Incentive
Options or Non-Statutory Options. Non-Statutory Options shall be identified as
such in the Award Grant. The Committee may grant Stock Appreciation Rights
either (i) independently of Options or (ii) in tandem with Options such that the
exercise of the Option or Stock Appreciation Right with respect to a share of
Common Stock cancels the tandem Stock Appreciation Right or Option,
respectively, with respect to such share. The grant of each Option or Stock
Appreciation Right shall be confirmed in writing by an Award Grant in the form
prescribed by the Committee.

     (A)  Exercise Price.

          At the time an Option or Stock Appreciation Right is granted, the
          Committee shall determine the Exercise Price. Except for adjustments
          as provided in Section 13, the Exercise Price for any outstanding
          Option or Stock Appreciation Right may not be decreased after the date
          of grant nor may any outstanding Option or Stock Appreciation Right be
          surrendered to the Company as consideration for the grant of a new
          Option or Stock Appreciation Right with a lower Exercise Price.

     (B)  Exercise Period.

          Each Option or Stock Appreciation Right granted under this Plan shall
          be exercisable during such period and under such circumstances as the
          Committee shall determine, subject to the following rules:

          (1)  An Option or Stock Appreciation Right must be exercised prior to
               the Expiration Date.

          (2)  Each Option or Stock Appreciation Right shall become exercisable
               upon the occurrence of a Change in Control whether or not
               otherwise then exercisable under the provisions of the applicable
               Award Grant relating thereto.

          (3)  The effect of a Participant's cessation of performance of
               services as an Employee for the Company or a Subsidiary shall be
               as follows:




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                                       13


               (i)  Retirement. If cessation of performance of services as an
                    Employee is the result of Retirement, the Participant may
                    exercise any outstanding Option or Stock Appreciation Right
                    that had become exercisable under the terms of the
                    applicable Award Grant prior to the Date of Termination
                    before the Expiration Date.

               (ii) Death. If a Participant dies while the Participant is
                    continuing to perform services as an Employee for the
                    Company or a Subsidiary or during the period following
                    Retirement and before the Expiration Date, the Successor may
                    exercise the Participant's Options or Stock Appreciation
                    Rights at any time prior to the Expiration Date, whether or
                    not such Options or Stock Appreciation Rights were
                    exercisable on the date of the Participant's death under the
                    applicable Award Grant.

               (iii) Disability. If the Committee determines that a Participant
                    ceased to perform services as an Employee for the Company or
                    a Subsidiary because of Disability, any Option or Stock
                    Appreciation Right held by such Participant on the Date of
                    Termination may be exercised (whether or not such Option or
                    Stock Appreciation Right was exercisable on the Date of
                    Termination under the provisions of the Award Grant relating
                    thereto) at any time prior to the Expiration Date.

               (iv) Involuntary Termination without Cause. If the Participant
                    ceases to perform services as an Employee for the Company or
                    a Subsidiary involuntarily without Cause, the Participant
                    may exercise any outstanding Option or Stock Appreciation
                    Right which was vested on the Date of Termination at any
                    time before the Expiration Date.

               (v)  Involuntary Termination for Cause. If the Participant
                    ceases to perform services as an Employee for the Company or
                    a Subsidiary involuntarily for Cause, any outstanding Option
                    or Stock Appreciation Right held by such Participant shall
                    be immediately cancelled.

               (vi) Other Termination. If the Participant ceases to perform
                    services for the Company or a Subsidiary for any reason
                    other than as set forth in subparagraphs (i) through (v)
                    above, any outstanding Option or Stock Appreciation Right
                    held by such Participant shall be immediately cancelled.




<PAGE>

                                       14


     (C)  Exercise Procedures.

          Each Option or Stock Appreciation Right granted under this Plan may be
          exercised to the extent exercisable, in whole or in part at any time
          during the Exercise Period, for such number of shares as shall be
          prescribed by the provisions of the Award Grant evidencing such Option
          or Stock Appreciation Right, provided that:

          (1)  An Option or Stock Appreciation Right may be exercised by the
               Participant or a Successor only by written notice (in the form
               prescribed by the Committee) to the Company specifying the number
               of shares to which such notice applies.

          (2)  The aggregate Exercise Price of the shares as to which an Option
               may be exercised shall be, in the discretion of the Committee,
               (a) paid in U.S. funds by any one or any combination of the
               following: cash, (including check, draft or wire transfer made
               payable to the order of the Company), or delivery of Common Stock
               certificates endorsed in blank or accompanied by executed stock
               powers with signatures guaranteed by a national bank or trust
               company or a member of a national securities exchange evidencing
               shares of Common Stock which have been held for more than six
               months, whose value shall be deemed to be the Fair Market Value
               on the date of exercise of such Common Stock, or (b) deemed to be
               paid in full provided the notice of the exercise of an Option is
               accompanied by a copy of irrevocable instructions to a broker to
               promptly deliver to the Company the amount of sale or loan
               proceeds sufficient to cover the Exercise Price or (c) paid upon
               such terms and conditions, including provision for securing the
               payment of the same, as the Committee, in its discretion, shall
               provide.

          (3)  As soon as practicable after receipt by the Company of notice of
               exercise and of payment in full of the Exercise Price of the
               shares with respect to which an Option has been exercised, a
               certificate or certificates representing such shares shall be
               registered in the name or names of the Participant or Successor
               and shall be delivered to the Participant, Participant's agent or
               Successor. If any part of the Exercise Price is paid on a
               deferred basis (to the extent such deferral is permitted by the
               Committee), the shares for which payment has been deferred shall
               be registered in the name of the Participant or Successor but the
               certificate or certificates representing such shares shall not be
               delivered to the Participant or Successor until the Exercise
               Price for such shares has been paid in full.

     (D)  Special Rules Relating to Incentive Options.




<PAGE>

                                       15


          (1)  No Incentive Option may be granted to an individual who is not an
               Employee of the Company or a Subsidiary.

          (2)  The aggregate Fair Market Value (determined as of the time the
               Option is granted) of the Common Stock with respect to which
               Incentive Options are exercisable for the first time during any
               calendar year by an Employee under all plans of the Company and
               its Subsidiaries shall not exceed the greater of $100,000 or such
               sum as may from time to time be permitted under Code section 422.

9. Other Stock Awards.

The Committee may make Awards consisting of Restricted Stock or Stock Units
containing such terms and conditions, and subject to such restrictions and
contingencies as the Committee shall determine, subject to the provisions of the
Plan. Unless otherwise authorized by the Committee, as a condition of receiving
an Award consisting of Restricted Stock, a Participant must waive in writing the
right to make an election under Section 83(b) of the Code to report the value of
the Restricted Stock as income on the Date of Grant. If the right to become
vested in a Restricted Stock Award granted under this Section 9 is conditioned
on the completion of a specified period of service as an Employee with the
Company or the Subsidiaries, without achievement of Performance Measures or
other performance objectives being required as a condition of vesting, and
without it being granted in lieu of other compensation or to replace forfeited
awards from a prior service recipient, then, unless otherwise determined by the
Committee and set forth in a Participant's Award Grant, the required period of
service for full vesting shall be not less than three years, subject to
acceleration of vesting in the following circumstances:

     (A) to the extent permitted by the Committee, in the event of the
     Participant's Retirement, death, Disability, or termination by the Company
     without Cause;

     (B) in the event of a Change in Control, unless such Award is replaced by
     an award of equivalent value provided by the continuing entity which
     replacement award vests not later than the replaced Award and, to the
     extent not previously vested, vests in full in the event of any involuntary
     cessation of performance of services for the continuing entity within 18
     months following the Change in Control (other than involuntary termination
     for Cause).

10. Performance Awards.

The Committee may make Awards consisting of Performance Shares, containing such
terms and conditions, and subject to such restrictions and contingencies as the
Committee shall determine, subject to the provisions of the Plan. Performance
Awards shall be conditioned on the achievement of Performance Goals, based on
one or more Performance Measures, as determined by the Committee, over a
performance period (not less than one year) prescribed by the Committee. For
Awards under this Section 10 intended to be "performance-based compensation"
within the meaning of regulations under Code section 162(m), the grant of the
Awards and the




<PAGE>

                                       16


performance goals shall be made during the period required under Code section
162(m). In the event that a Change in Control occurs after a Performance Award
has been granted but before completion of the performance period, a pro rata
portion of such Award shall become payable as of the date of the Change in
Control to the extent otherwise earned on the basis of achievement of the pro
rata portion of the Performance Goals relating to the portion of the performance
period completed as of the date of the Change in Control. Unless otherwise
directed by the Committee, as a condition of receiving an Award consisting of
Performance Shares, a Participant must waive in writing the right to make an
election under Section 83(b) of the Code to report the value of the Performance
Shares as income on the Date of Grant.

11. Non-Transferability.

Unless otherwise designated by the Committee to the contrary, each Award granted
under the Plan shall by its terms be non-transferable by the Participant (except
by will or the laws of descent and distribution). An Option or Stock
Appreciation Right shall be exercisable during the Participant's lifetime only
by the Participant, his or her guardian or legal representative or by such other
means as the Committee may approve from time to time that is not inconsistent
with or contrary to the provisions of either Section 16(b) of the Exchange Act
or Rule 16b-3, as either may be amended from time to time, or any law, rule,
regulation or other provision that may hereafter replace such Rule. A
Participant may also designate a beneficiary to exercise his or her Awards after
the Participant's death. The Committee may amend outstanding Awards to provide
for transfer, without payment of consideration, to immediate family members of
the Participant or to trusts or partnerships for such family members.

12. Listing and Registration of Shares and Restrictions on Shares.

If at any time the Board of Directors shall determine, in its discretion, that
the listing, registration or qualification of any of the shares subject to
Awards under the Plan upon any securities exchange or under any state or federal
law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of or in connection with the purchase or
issue of shares thereunder, no outstanding Awards which would result in the
purchase or issuance of shares may be exercised or otherwise settled unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Board of
Directors or the Committee. The Board of Directors or the Committee may require
any Participant to make such representations and furnish such information as it
may consider appropriate in connection with the issuance or delivery of the
shares in compliance with applicable law and shall have the authority to cause
the Company at its expense to take any action related to the Plan which may be
required in connection with such listing, registration, qualification, consent
or approval.

The Committee may impose such restrictions on any shares acquired pursuant to
Restricted Stock Awards as it may deem advisable, including, without limitation,
restrictions to comply with applicable Federal securities laws, with the
requirements of any stock exchange or market upon which such shares are then
listed and/or traded and with any blue sky or state securities laws applicable
to such shares.




<PAGE>

                                       17


Certificates representing shares subject to Restricted Stock Awards may bear a
legend substantially as follows:

     "The sale or other transfer of the shares of stock represented by this
     certificate, whether voluntary, involuntary or by operation of law, is
     subject to certain restrictions on transfer as set forth in the Public
     Service Enterprise Group Incorporated 2004 Long-Term Incentive Plan, and in
     an award document. A copy of such Plan and award documents may be obtained
     from Public Service Enterprise Group Incorporated."

The Company shall have the right to retain certificates of shares that are
subject to Restricted Stock Awards until such time as all restrictions
applicable to such shares have been satisfied. Shares subject to Restricted
Stock Awards shall become freely transferrable (subject to applicable laws and
Company imposed trading restrictions), and legends on share certificates shall
be removed, once all restrictions applicable to such shares have been
satisfied.

The Committee may require Participants to execute stock powers or other similar
instruments in order to facilitate the return to the Company of shares upon
forfeiture of Restricted Stock Awards.

13. Adjustments.

The Committee may make such adjustments as it deems appropriate to meet the
intent of the Plan in the event of changes that impact the Company's share price
or share status, provided that any such actions are consistently and equitably
applicable to all affected Participants and provided, further, that no such
adjustment shall be made to Awards to Covered Employees if it would cause such
Awards to no longer qualify as "performance-based compensation" for purposes of
Code section 162(m).

In the event of any stock dividend, stock split, combination or exchange of
shares, merger, consolidation, spin-off or other distribution (other than normal
cash dividends) of Company assets to shareholders, or any other change affecting
shares, such adjustments, if any, as the Committee in its discretion may deem
appropriate to reflect such change shall be made with respect to (i) the
aggregate number of shares that may be issued under the Plan or that may be
subject to Awards of a specified type and/or to any individual; (ii) the number
of shares covered by outstanding Awards to any individual under the Plan; and/or
(iii) the applicable price per share with respect to any outstanding Options,
Stock Appreciation Rights and other Awards under the Plan.

14. Tax Withholding.

Delivery of any cash, shares, dividends or any other benefits under the Plan is
subject to withholding of applicable taxes. The Committee unilaterally or by
arrangement with the Participant or Successor shall make appropriate provision
for satisfaction of withholding taxes in




<PAGE>

                                       18


the case of any transaction under the Plan, which gives rise to a withholding
requirement. The Committee, in its discretion, and subject to such requirements
as the Committee may impose prior to the occurrence of such withholding, may
permit such withholding obligations to be satisfied through cash payment by the
Participant, through the surrender of shares of Common Stock which the
Participant already owns and which have been held for more than six months, or
(to the extent of minimum statutory withholding requirements) through
withholding of shares of Common Stock to which the Participant is otherwise
entitled under the Plan.

15. Amendments and Termination.

The Board of Directors may amend this Plan as it shall deem advisable, except
that the Board of Directors may not, without further approval of the
shareholders of the Company, (a) increase the total number of shares of Common
Stock which may be issued under the Plan as set forth in Section 6(B) or the
maximum number of shares that may be issued, as Awards pursuant to Sections 8
through 10, to any individual, or (b) change the class of individuals eligible
for Awards. The Board of Directors may, in its discretion, terminate this Plan
at any time. No amendment or termination may, in the absence of written consent
to the amendment or termination by the affected Participant (or, if the
Participant is not then living, the affected Successor), adversely affect the
rights of any Participant or Successor under any Award granted under the Plan
prior to the date such amendment or termination is effective, provided that
adjustments pursuant to Section 13 are not subject to such limitation. Subject
to the foregoing and the requirements of Code section 162(m), the Board of
Directors may without further action on the part of the shareholders of the
Company or the consent of Participants, amend the Plan to preserve the Company's
tax deduction under Code section 162(m).

16. Foreign Jurisdictions.

The Committee may, from time to time, adopt, amend, and terminate under the Plan
such arrangements, not inconsistent with the intent of the Plan, as it may deem
necessary or desirable, to make available tax or other benefits of laws of any
foreign jurisdiction to Participants who are subject to such laws and who
receive Awards under the Plan.

17. Compliance with Code section 162(m).

With respect to Covered Employees, transactions under the Plan are intended to
avoid loss of the deduction referred to in paragraph (1) of Code section 162(m).
Anything in the Plan or elsewhere to the contrary notwithstanding, to the extent
any provision of the Plan or action by the Committee would result in the loss of
such deduction, it shall be deemed null and void as relates to Covered
Employees, to the extent permitted by law and deemed advisable by the Committee.

18. Notices.




<PAGE>

                                       19


All notices under the Plan shall be in writing, and if to the Company, shall be
delivered to the Secretary of the Company or mailed to its principal office, 80
Park Plaza, Newark, New Jersey 07102, addressed to the attention of the
Secretary; and if to the Participant, shall be delivered personally or mailed to
the Participant at the address appearing in the payroll records of the Company
or Subsidiary or, if applicable, to the Participant's Successor at the last
known address appearing in the records of the Company. Such addresses may be
changed at any time by written notice to the other party.

19. General.

Except where otherwise indicated by the context, any masculine term used herein
shall also include the feminine; the singular shall include the plural and the
plural shall include the singular.

The titles and headings of the sections of the Plan are for convenience of
reference only and, in the event of any conflict, the text of the Plan, rather
than such titles or headings, shall control.

If any part of the Plan is declared to be unlawful or invalid, such unlawfulness
or invalidity shall not invalidate any other part of the Plan. Any part of the
Plan so declared to be unlawful or invalid shall, if possible, be construed in a
manner that will give effect to the terms of such part to the fullest extent
possible while remaining lawful and valid.

The provisions of the Plan shall take precedence over any conflicting provision
contained in an Award. All matters relating to the Plan or an Award granted
hereunder shall, to the extent not preempted by Federal law, be governed and
construed in accordance with the laws of the State of New Jersey, without regard
to the principles of conflict of laws.

The Plan and Award Grants shall be binding on Successors and on successors to
the Company, whether the existence of such successor to the Company is the
result of a direct or indirect purchase of all or substantially all of the
business and/or assets of the Company, or a merger, consolidation, or otherwise.