DEFERRED COMPENSATION PLAN FOR CERTAIN EMPLOYEES OF

                                PSEG GLOBAL INC.

                                February 1, 1995




                                                    As Amended December 21, 1998


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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


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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


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               DEFERRED COMPENSATION PLAN FOR CERTAIN EMPLOYEES OF

                                PSEG GLOBAL INC.

                                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.


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     (f) "Company" -- PSEG Global Inc. and Affiliates.

     (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 PSEG
Global Inc.

     (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.


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                                       3


     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 


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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) 


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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 


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                                       6


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 


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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 


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                                       8


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 


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                                       9


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.


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                                                                      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______________________


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                                                                      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


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                                                                      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                   OF PRIMARY               RELATIONSHIP
      BENEFICIARIES                     BENEFICIARY(IES)          TO EMPLOYEE

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

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

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

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

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

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

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

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


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


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                                                                      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