<PAGE>

                                                                  Exhibit 10a(2)

                DEFERRED COMPENSATION PLAN FOR CERTAIN EMPLOYEES
                 OF PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
                               AND ITS AFFILIATES

                                 RESTATED AND AMENDED EFFECTIVE DECEMBER 1, 2005




<PAGE>

               DEFERRED COMPENSATION PLAN FOR CERTAIN EMPLOYEES OF
         PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED AND ITS AFFILIATES
                 RESTATED AND AMENDED EFFECTIVE DECEMBER 1, 2005

      1. PURPOSE. The purpose of this Plan is to provide a method to certain
select and key employees of the Company and its Affiliates to defer compensation
as provided herein. This Plan was formerly known as the Deferred Compensation
Plan for Certain Employees of Public Service Electric and Gas Company.

      2. AMENDMENT. This Plan is restated and amended, effective December 1,
2005, to conform with the applicable provisions of the American Jobs Creation
Act of 2004 and Section 409A of the Code.

      3. DEFINITIONS OF 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 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 under Code section 414(o). The term
                  affiliate shall also include such entities which shall be
                  specifically designated by the Committee.

            (c)   "Assets" - all Compensation and interest that have been
                  credited to a Participant's Account in accordance with
                  Paragraph 5 of this Plan.

            (d)   "Beneficiary" - the individual(s) and/or entity(ies)
                  designated and defined by the Plan.

            (e)   "Change in Control" - the occurrence of any of the following
                  events:

                  (i)   any "person" (within the meaning of Section 13(d) of the
                        Securities Exchange Act of 1934, as amended from time to
                        time (the "Act")) is or becomes the beneficial owner
                        within the meaning of Rule 13d-3 under the 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




<PAGE>

                        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 subparagraph (iii) below; or

                  (ii)  the following individuals cease for any reason to
                        constitute a majority of the number of directors then
                        serving: individuals who, on December 15, 1998,
                        constitute the board of directors of the Company
                        ("Board") 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 or nomination for election by
                        the Company's stockholders 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
                        December 15, 1998 or whose appointment, election or
                        nomination for election was previously so approved or
                        recommended; or

                  (iii) 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 (1) 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
                        of the Company, 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 (2) a merger or
                        consolidation effected to implement a recapitalization
                        of the Company (or similar transaction) in which no
                        person is or becomes 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

                  (iv)  the stockholders of the Company approve a plan of
                        complete liquidation or dissolution of the Company or
                        there




<PAGE>

                        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 are owned by
                        stockholders of the Company in substantially the same
                        proportions as their ownership of the Company
                        immediately prior to such sale.

                  (v)   Notwithstanding the foregoing subparagraphs (i), (ii),
                        (iii) and (iv), 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 of the Company 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.

            (f)   "Code" - the Internal Revenue Code of 1986, as amended.

            (g)   "Committee" - the Employee Benefits Policy Committee of the
                  Company.

            (h)   "Company" - Public Service Enterprise Group Incorporated.

            (i)   "Compensation" - the total remuneration paid to a Participant
                  for services rendered to the Company or a Participating
                  Affiliate, excluding the Company's or Participating
                  Affiliate's cost for any public or private employee benefit
                  plan, including this Plan, but including all elective
                  contributions that are made by the Company or Participating
                  Affiliate under Internal Revenue Code Sections 125 or 401(k).
                  Compensation deferrable under this Plan shall specifically
                  include any and all amounts transferred from the deferred
                  compensation accounts of the Company's Management Incentive
                  Compensation Plan, the Management Incentive Compensation Plan
                  of Public Service Electric and Gas Company and any prior
                  deferred compensation plan of an Affiliate.

            (j)   "Deferred Compensation" - the amount of Compensation deferred
                  pursuant to Paragraph 4 of this Plan.

            (k)   "Disability" - a Participant will be considered disabled if
                  he/she meets one of the following requirements: (i) he/she is
                  unable to engage in any substantial gainful activity by reason
                  of any medically determinable physical or mental impairment
                  that can be expected to result in death or to last for a
                  continuous period of not less than 12 months; or (ii) he/she
                  is, by




<PAGE>

                  reason of any medically determinable physical or mental
                  impairment that can be expected to result in death or to last
                  for a continuous period of not less than 12 months, receiving
                  income replacement benefits for a period of not less than 3
                  months under a Company or Affiliate sponsored plan.

            (l)   "Employer" - the Company and any Participating Affiliate.

            (m)   "Investment Fund" - the fund or funds selected by the
                  Committee from time to time which shall serve as a means of
                  measuring the increase or decrease of each Participant's
                  Account. The Committee may, in its discretion, add or
                  discontinue any Investment Fund available under the Plan. The
                  Committee shall provide each affected Participant with the
                  opportunity, without limiting or otherwise impairing any other
                  right of such Participant regarding changes in investment
                  directions, to redirect the allocation of his or her Account
                  invested in any discontinued Investment Fund among the other
                  Investment Funds available under the Plan, including any
                  replacement investment vehicle.

            (n)   "Participant" - each employee of the Company or any
                  Participating Affiliate as may be designated by the Chief
                  Executive Officer of the Company.

            (o)   "Participating Affiliate" - any Affiliate of the Company which
                  (a) adopts this Plan with the approval of the Company; (b)
                  authorizes the Board of Directors and the Committee to act for
                  it in all matters arising under or with respect to this Plan;
                  and (c) complies with such other terms and conditions relating
                  to this Plan as may be imposed by the Company.

            (p)   "Plan" - the Deferred Compensation Plan for Certain Employees
                  of Public Service Enterprise Group Incorporated and its
                  Affiliates (formerly known as the Deferred Compensation Plan
                  for Certain Employees of Public Service Electric and Gas
                  Company).

      4. ELECTION AS TO THE AMOUNT OF COMPENSATION THAT IS TO BE DEFERRED. A
Participant may elect to defer any portion of his/her Compensation otherwise
payable for services rendered for his/her Employer after the date of adoption of
this Plan.

      (a) Timing of Elections - Any election to defer must be made by filing
with the Committee an "Election in Connection with Deferral of Compensation",
the form of which shall be designated and published by the Committee from
time-to-time. All elections to defer must be made in the calendar year prior to
the year that the services giving rise to the compensation are performed.
Provided, however, that elections to defer performance-based compensation may be
made up to the date that is six-months before the end of the related performance
period, as long as a) the performance period is at least 12 months in length, b)
the Participant performed services continuously from the date the performance
criteria were established through the date the deferral election is made and c)
at the time the deferral election is made, the performance-based




<PAGE>

compensation is not both i) substantially certain to be paid and ii) readily
ascertainable. A Participant may change (using the election form for such
purposes), not later than the date than the last date that an election to defer
may be made, the amount of Compensation to be deferred by him/her with respect
to the next succeeding calendar year or performance period.

      In the calendar year that a Participant first becomes eligible to
participate in this Plan, such Participant may elect to defer Compensation for
part of that calendar year but only if such election is made within thirty (30)
days after the Participant first becomes eligible to participate in this Plan or
any other plan required under Section 409A of the Code to be aggregated with
this Plan. Except as otherwise specifically provided for herein, Compensation
may be deferred prospectively only, and the amount of Compensation to be
deferred may be changed only with respect to future calendar years.

      (b) Special One-Time Election to Rescind 2005 Deferrals - Not later than
December 14, 2005, Participants who had elected to defer compensation during
2005 may, by written notice, the form of which shall be designated and published
by the Committee, rescind his/her election to defer 2005 compensation and such
amounts shall be currently paid to the Participant..

      5. HOW THE ACCOUNT IS TO BE MAINTAINED.

            (a) Establishment of Account - The Company shall establish an
Account for each Participant who elects to participate in the Plan. Each
Participant's Account shall be credited at the end of each month with an amount
equal to the Deferred Compensation which would have otherwise been payable to
him/her that month.

            (b) Earnings Credits on Assets in the Account - Each Participant,
except Participants whose active employment by an Employer terminated prior to
January 1, 2000, may direct investment of his or her Account among the
Investment Funds (in the manner established by the Committee) in multiples of
one percent; provided, however, that the Committee shall not be obligated to
effectuate any such investment direction. In the case of (i) Participants whose
active employment by an Employer terminated prior to January 1, 2000 and (ii) a
Participant who fails to provide a designation of Investment Funds, such
Participants shall be deemed to have designated 100 percent of their Accounts to
be invested in the Investment Fund that determines income accrual with reference
to the prime commercial lending rate of JPMorgan Chase Bank (formerly, the Chase
Manhattan Bank).

            Except with respect to an investment election related to any
Investment Fund which is discontinued during a Plan Year, which shall be
effective immediately, a Participant's investment election may be changed
annually and will be effective from January 1 of the Plan Year next following
receipt of the Participant's investment election form.

            Each Participant's Account shall be credited with a rate of return
on the last day of March, June, September and December equal to the rate of
return experienced by the Investment Fund selected by the Participant for the
same period. The fair market value of each Investment Fund shall be determined
by the Committee and shall represent the fair market value of all securities and
other property held by the Investment Fund.




<PAGE>

            (c) Title to and Beneficial Ownership of Assets - The Plan shall be
unfunded. The Company shall not be required to segregate any amounts credited to
any Participant's Account, which shall be established merely as an accounting
convenience. Title to and beneficial ownership of any Assets, whether Deferred
Compensation or earnings credited to a Participant's Account pursuant to
Subparagraphs 5(a) and (b) hereof, shall at all times remain in the Company, and
no Participant nor Beneficiary shall have any interest whatsoever in any
specific assets of the Company. All Assets shall at all times remain solely the
property of the Company subject to the claims of its general creditors and
available for the Company's use for whatever purpose desired.

      6. DISTRIBUTION FROM THE ACCOUNT

            (a) Election as to the Commencement of the Distribution - By
election on the form designated by and filed with the Committee at the same time
he/she elects to defer compensation under Paragraph 4, a Participant, may elect
to have distribution from his/her account commence (i) on the thirtieth day
after the date he/she ceases to be employed by an Employer or, in the
alternative, (ii) on January 15th of any calendar year following termination of
employment elected by the Participant, but in any event no later than the later
of (A) the January of the year following the year of the Participant's 70th
birthday or (B) the January following termination of employment or (iii)
pursuant to the terms of any written employment agreement applicable to the
Participant. Notwithstanding the forgoing, however, for any Participant who is a
"Key Employee," as defined in the Code, distribution of his/her account may not
occur earlier than six months following his/her termination of service.

            (b) Election as to the Timing of the Distribution(s) - By election
on the form designated by and filed with the Committee at the same time he/she
elects to defer compensation under Paragraph 4, a Participant may elect to
receive the distribution of his/her Account in the form of (i) one lump-sum
payment, (ii) annual distributions over a five-year period or (3) annual
distributions over a 10-year period. A Participant may change such election by
filing a subsequent election form, 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 a Participant's Account, including earnings at the rate
provided in Subparagraph 5(b) of this Plan to the date of distribution, shall be
paid to the Participant on the date determined under Subparagraph 6(a) of this
Plan. In the case of a distribution over a period of years, the Company shall
pay to the Participant on the date determined under Subparagraph 6(a) of this
Plan and on the yearly anniversaries of such date, annual installments of the
unpaid balance of the Assets in the Participant's Account, including earnings on
the unpaid balance at the rate provided in Subparagraph 5(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 earnings, in the Participant'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) Changes in Distribution Elections - (i) Participants may, by
notice filed with the Company prior to December 31st of any year, make changes
of distribution elections on a prospective basis; (ii) Participants may, by
notice filed with the Company, make changes of




<PAGE>

distribution elections with respect to prior deferred compensation as long (A)
any such new distribution election is made at least one year prior to the date
that the commencement of the distribution would otherwise have occurred and (B)
the revised commencement date is at least five years later than the date that
the commencement of the distribution would otherwise have occurred; (iii)
Special One-Time Election - Participants may, by notice filed with the Company
prior to December 31, 2005, make a one-time election to change any distribution
election previously made with respect to compensation deferred on or before
December 31, 2005.

            (d) Distribution in Case of Certain Disability - In the event of a
Participant's Disability prior to a calendar year elected by the Participant
under Subparagraph 6(a)(ii) of this Plan for distribution to commence,
distribution of the Participant's Account shall commence in the month following
the month in which the Participant terminates employment for Disability, in
accordance with the Participant's election under Subparagraph 6(b) of this Plan
as to the form of distribution.

            (e) Distribution in Case of Death - In the event of a Participant's
death, the balance of the Participant's Account shall be distributed to the
Participant's Beneficiary(ies) over a period of not more than five (5) years, in
accordance with the Participant's election (on the form designated by and filed
with the Committee) for distribution in case of death. Any change in the period
over which such payments are made shall only apply to future deferrals. Such
distribution shall be made in a manner consistent with Subparagraph 6(b) of this
Plan and shall commence in the month of January of the year after the year of
the Participant'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 a Participant's death after
distribution of his/her Account has commenced, any election under this
Subparagraph 6(e) shall not extend the time of payment of his/her Account beyond
the time when distribution would have been completed if he/she had lived. A
Participant may change Beneficiary designations by filing a subsequent
designation with the Committee.

            (f) Request for Change in Distribution on Account of an
Unforeseeable Emergency - A Participant, Beneficiary or a legal representative
may request an acceleration of any payments from a Participant's Account by
filing a written request therefore with the Committee. The Committee may, in its
sole discretion, grant such request only if the Committee determines that an
emergency beyond the control of the Participant, Beneficiary or legal
representative exists and which would cause such Participant, beneficiary or
legal representative severe financial hardship if the payment of such benefits
were not approved. Any such distribution for hardship shall be limited to the
amount needed to meet such emergency plus the amount of any tax liability
resulting from the distribution. A Participant who makes a hardship withdrawal
may not reenter this Plan for 12 months after the date of withdrawal. Any
distribution under this Subparagraph 6(f) shall be made on the 15th day after
the Committee grants such request for hardship withdrawal.

            (g) Employment not Terminated if Transferred to an Affiliate - For
the purposes of this Paragraph 6, an Participant shall not be deemed to have
terminated his/her




<PAGE>

employment if he/she is transferred to the employ of a corporation is an
Affiliate of the Company.

            (h) Company may Distribute 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 the
Participant's Account in this Plan and in the Participant's accounts in all
other plans required under the Section 409A of the Code to be aggregated with
this Plan, are $5,000 or less at any time after the Participant ceases to be
employed by the Company.

            (i) Failure to make a Distribution Election - If, with respect to
any election to defer compensation for any year, a Participant fails to make a
proper election with respect to the distribution of such compensation, such
amount will be distributed in a lump sum on the thirtieth day following the
Participant's termination of employment.

            (j) Distribution in Case of Certain Tax Events - If, with respect to
any Participant, the Plan fails to meet the requirements of the Code with
respect to the deferral of tax liability, the Company may accelerate
distribution from a Participant's Account amounts sufficient to meet such
Participant's resulting Federal, State, Local and/or Foreign tax liability
(including any interest and penalties).

      7. ASSIGNMENT. No benefit under the Plan shall in any manner or to any
extent be assigned, alienated, or transferred by any Participant or Beneficiary
under the Plan or subject to attachment, garnishment or other legal process.

      8 PLAN DOES NOT CONSTITUTE AN EMPLOYMENT AGREEMENT. This Plan shall not
constitute a contract for the continued employment of any Participant by the
Company. The Company reserves the right to modify a Participant's compensation
at any time and from time to time as it considers appropriate and to terminate
his/her employment for any reason at any time notwithstanding this Plan.

      9. AMENDMENT OR TERMINATION OF THE PLAN BY THE COMPANY. The Company may,
in its sole discretion and by action of its Board of Directors or Employee
Benefit Policy Committee, amend, modify or terminate this Plan at any time,
provided, however, that no such amendment, modification or termination shall
adversely affect the right of a Participant in respect of Deferred Compensation
previously earned by him/her which has not been paid, unless such Participant or
his/her legal representative shall consent to such change; and no such
amendment, modification or termination shall entitle any Participant to an
acceleration of any distributions from this Plan. Provided, further, that
notwithstanding any other provision of this Plan, upon the occurrence of a
Change in Control, the earnings credit calculated pursuant to Paragraph 5 may
not be reduced below the prime commercial lending rate described in Subparagraph
5(b).

      10. WHAT CONSTITUTES NOTICE. Any notice to an Participant, 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/her
last known address. Any notice to the




<PAGE>

Company or the Committee hereunder (including the filing of election and
designation forms) 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, P.O. Box 1170, Newark, New Jersey 07102.

      11. 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.

      12. 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.

      13. 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.

      14. 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. This Plan is
specifically intended to comply with the provisions of The American Jobs
Creation Act of 2004 (the "AJCA") and Section 409A of the Code and it shall
automatically incorporate all applicable restrictions of the AJCA, the Code and
its related regulations, and the Company will amend the Plan to the extent
necessary to comply with those requirements. The timing under which a
Participant will have a right to receive any payment under this Plan will be
deemed to be automatically modified, and a Participant's rights under the Plan
limited to conform to any requirements under, the AJCA, the Code and its related
regulations.

      15. MISCELLANEOUS. The masculine pronoun shall mean the feminine wherever
appropriate.