<PAGE>

                                                                 Exhibit 4a99

                              SUPPLEMENTAL MORTGAGE

================================================================================

                             Supplemental Indenture

                         Dated December 1, 2003 (No. 1)

                                   ----------

                                 SUPPLEMENTAL TO
                          FIRST AND REFUNDING MORTGAGE
                              DATED AUGUST 1, 1924

                                   ----------

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

                                   ----------

                           PROVIDING FOR THE ISSUE OF
                       FIRST AND REFUNDING MORTGAGE BONDS,
                           POLLUTION CONTROL SERIES Y

================================================================================

                     RECORD IN MORTGAGE BOOK AND RETURN TO:
                              JAMES T. FORAN, ESQ.
                               80 PARK PLAZA, T5B
                                  P.O. BOX 570
                               NEWARK, N.J. 07101

This instrument prepared by


/s/ Edward C. Fedak
----------------------------------
(EDWARD C. FEDAK, ESQ.)




<PAGE>

                                TABLE OF CONTENTS

                                   ----------

<TABLE>
<CAPTION>
                                                                               Page
                                                                               ----
<S>                                                                             <C>
RECITALS ...................................................................     1
FORM OF BOND ...............................................................     2
FORM OF CERTIFICATE OF AUTHENTICATION ......................................     4
GRANTING CLAUSES ...........................................................     5

                                   ARTICLE I.
                    BONDS OF THE POLLUTION CONTROL SERIES Y.

Description of Pollution Control Series Y ..................................     5

                                   ARTICLE II.
                REDEMPTION OF BONDS--POLLUTION CONTROL SERIES Y.

SECTION 2.01.   Redemption--Redemption Prices ..............................     6
SECTION 2.02.   Notice of Redemption .......................................     8
SECTION 2.03.   Interest on Called Bonds to Cease ..........................     8
SECTION 2.04.   Bonds Called in Part .......................................     9
SECTION 2.05.   Provisions of Indenture Not Applicable .....................     9

                                  ARTICLE III.
      CREDITS WITH RESPECT TO THE BONDS OF THE POLLUTION CONTROL SERIES Y.

SECTION 3.01.   Credits ....................................................     9
SECTION 3.02.   Certificate of the Company .................................     9

                                   ARTICLE IV.
                                 MISCELLANEOUS.

SECTION 4.01.   Authentication of Bonds of Pollution Control Series Y ......     9
SECTION 4.02.   Additional Restrictions on Authentication of Additional
                   Bonds Under Indenture ...................................     9
SECTION 4.03.   Restriction on Dividends ...................................    10
SECTION 4.04.   Use of Facsimile Seal and Signatures .......................    10
SECTION 4.05.   Effective Period of Supplemental Indenture .................    10
SECTION 4.06.   Time for Making of Payment .................................    10
SECTION 4.07.   Effect of Approval of Board of Public Utilities of the State
                   of New Jersey ...........................................    10
SECTION 4.08.   Execution in Counterparts ..................................    10
Acknowledgments ............................................................    11
Certificate of Residence ...................................................    13
</TABLE>




<PAGE>

     SUPPLEMENTAL INDENTURE, dated the 1st day of December, 2003 (No. 1), for
convenience of reference and effective from the time of execution and delivery
hereof, between PUBLIC SERVICE ELECTRIC AND GAS COMPANY, a corporation organized
under the laws of the State of New Jersey, hereinafter called the "Company",
party of the first part, and WACHOVIA BANK, NATIONAL ASSOCIATION, a national
banking association organized under the laws of the United States of America, as
Trustee under the indenture and dated August 1, 1924, below mentioned,
hereinafter called the "Trustee", party of the second part.

     WHEREAS, on July 25, 1924, the Company executed and delivered to Fidelity
Union Trust Company (now known as Wachovia Bank, National Association), a
certain indenture dated August 1, 1924 (hereinafter called the "Indenture"), to
secure and to provide for the issue of First and Refunding Mortgage Gold Bonds
of the Company; and

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

<TABLE>
<CAPTION>
                                                           Page
  County       Office            Book Number              Number
----------   ----------   -------------------------   --------------
<S>          <C>          <C>                         <C>
Atlantic     Clerk's      1955 of Mortgages                160
Bergen       Clerk's        94 of Chattel Mortgages      123 etc.
                           693 of Mortgages               88 etc.
Burlington   Clerk's        52 of Chattel Mortgages    Folio 8 etc.
                           177 of Mortgages           Folio 354 etc.
Camden       Register's     45 of Chattel Mortgages      184 etc.
                           239 of Mortgages               1 etc.
Cumberland   Clerk's       786 of Mortgages              638 & c.
Essex        Register's    437 of Chattel Mortgages        1-48
                          T-51 of Mortgages              341-392
Gloucester   Clerk's        34 of Chattel Mortgages      123 etc.
                           142 of Mortgages                7 etc.
Hudson       Register's    453 of Chattel Mortgages        9 etc.
                          1245 of Mortgages              484, etc.
Hunterdon    Clerk's       151 of Mortgages                 344
Mercer       Clerk's        67 of Chattel Mortgages        1 etc.
                           384 of Mortgages                1 etc.
Middlesex    Clerk's       113 of Chattel Mortgages        3 etc.
                           437 of Mortgages               294 etc.
Monmouth     Clerk's       951 of Mortgages              291 & c.
Morris       Clerk's       N-3 of Chattel Mortgages       446 etc.
                          F-10 of Mortgages               269 etc.
Ocean        Clerk's      1809 of Mortgages                 40
Passaic      Register's    M-6 of Chattel Mortgages      178, etc.
                          R-13 of Mortgages              268 etc.
Salem        Clerk's       267 of Mortgages              249 etc.
Somerset     Clerk's        46 of Chattel Mortgages      207 etc.
                          N-10 of Mortgages                1 etc.
Sussex       Clerk's       123 of Mortgages               10 & c.
Union        Register's    128 of Chattel Mortgages       28 & c.
                          9584 of Mortgages              259 etc.
Warren       Clerk's       124 of Mortgages              141 etc.
</TABLE>

and

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

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




<PAGE>

                                       2


and

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

     WHEREAS, the Company, by various supplemental indentures, supplemental to
the Indenture, the last of which was dated August 1, 2003, has granted,
bargained, sold, aliened, remised, released, conveyed, confirmed, assigned,
transferred and set over unto the Trustee certain property of the Company
acquired by it after the execution and delivery of the Indenture; and

     WHEREAS, since the execution and delivery of said supplemental indenture
dated August 1,2003, the Company has acquired property which, in accordance with
the provisions of the Indenture, is subject to the lien thereof and the Company
desires to confirm such lien; and

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

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

     WHEREAS, The Pollution Control Financing Authority of Salem County (the
"Authority") has previously issued and sold its Pollution Control Revenue
Refunding Bonds, 1993 Series A (Public Service Electric and Gas Company Project)
(the "1993 Authority Bonds") to redeem bonds that were issued to finance the
acquisition and construction of certain pollution control facilities at the Hope
Creek Generating Station located in Lower Alloways Creek Township, Salem County,
New Jersey (such generating station being sometimes referred to herein as the
"Plant" and the pollution control facilities being sometimes referred to herein
as the "Project"); and

     WHEREAS, the Authority is making provision for the issuance and sale of its
Pollution Control Revenue Refunding Bonds, 2003 Series A (Public Service
Electric and Gas Company Project) (the "2003 Series A Authority Bonds") to
provide funds for making a loan to the Company to provide for refinancing of a
portion of the costs of the Project, including the refunding and redemption of
the 1993 Authority Bonds; and

     WHEREAS, the 2003 Series A Authority Bonds are to be issued under a Trust
Indenture dated as of December 1, 2003 (the "Authority Indenture") between the
Authority and Wachovia Bank, National Association, as trustee (the "Authority
Trustee"); and

     WHEREAS, the Company has entered into a Pollution Control Facilities Loan
Agreement dated as of December 1, 2003 (the "Agreement") with the Authority
providing, among other things, for the loan by the Authority to the Company of
funds to finance a portion of the costs of the Project, including the refunding
and redemption of the 1993 Authority Bonds, and for the issuance by the Company
to the Authority Trustee, as assignee of the Authority, of First and Refunding
Mortgage Bonds of the Company to evidence the Company's obligation to repay said
loan, and for such purposes the Company desires to provide for the issue of
$64,000,000 aggregate principal amount of bonds secured by the Indenture of a
series to be designated as "First and Refunding Mortgage Bonds, Pollution
Control Series Y" (hereinafter sometimes called "Pollution Control Series Y");
and

     WHEREAS, the text of the bonds of the Pollution Control Series Y and of the
certificate of authentication to be borne by the bonds of the Pollution Control
Series Y shall be substantially of the following tenor:

                                 [FORM OF BOND]

     This Bond is not transferable except as provided in the Trust Indenture
dated as of December 1, 2003 between The Pollution Control Financing Authority
of Salem County and Wachovia Bank, National Association, as Trustee (the
"Authority Indenture"). Capitalized terms used herein, not otherwise expressly
defined herein, shall have the meanings ascribed to them in the Authority
Indenture.




<PAGE>

                                       3


REGISTERED                                                            REGISTERED
NUMBER                                                                    AMOUNT
R-                                                                   $64,000,000

                     PUBLIC SERVICE ELECTRIC AND GAS COMPANY
                       FIRST AND REFUNDING MORTGAGE BOND,
                           POLLUTION CONTROL SERIES Y

     Public Service Electric and Gas Company (hereinafter called the "Company"),
a corporation of the State of New Jersey, for value received, hereby promises to
pay to Wachovia Bank, National Association, as trustee under the Authority
Indenture, or registered assigns, the principal sum of Sixty-Four Million
Dollars, on May 1, 2028, and to pay interest thereon from the date hereof, at
the rate of 15.0% per annum, and until payment of said principal sum, provided,
however, that the Company shall receive certain credits against such obligations
to the extent that interest payable by the Authority from time to time for the
corresponding series of bonds issued pursuant to the Authority Indenture (the
"2003 Series A Authority Bonds") is less than interest calculated pursuant to
the foregoing rate. Such interest to be payable at such times and in such manner
as interest is payable on the 2003 Series A Authority Bonds.

     Both the principal hereof and interest hereon shall be paid at the
corporate trust office of Wachovia Bank, National Association in the City of
Morristown, State of New Jersey, or at the corporate trust office of any paying
agent appointed by the Company, in such coin or currency of the United States of
America as at the time of payment shall constitute legal tender for the payment
of public and private debts.

     This Bond is one of the First and Refunding Mortgage Bonds of the Company
issued and to be issued under and pursuant to, and all equally secured by, an
indenture of mortgage or deed of trust dated August 1, 1924, between the Company
and Wachovia Bank, National Association (formerly known as Fidelity Union Trust
Company), a national banking association of the United States of America, as
Trustee, as supplemented and amended by the supplemental indentures thereto,
including the supplemental indenture dated December 1, 2003 (No.1). This Bond is
one of the Bonds of the Pollution Control Series Y, which series is limited to
the aggregate principal amount of $64,000,000 and is issued pursuant to said
supplemental indenture dated December 1, 2003 (No. 1). Reference is hereby made
to said indenture and all supplements thereto for a specification of the
principal amount of Bonds from time to time issuable thereunder, and for a
description of the properties mortgaged and conveyed or assigned to said Trustee
or its successors, the nature and extent of the security, and the rights of the
holders of said Bonds and any coupons appurtenant thereto, and of the Trustee in
respect of such security.

     In and by said indenture, as amended and supplemented, it is provided that
with the written approval of the Company and the Trustee, any of the provisions
of said indenture may from time to time be eliminated or modified and other
provisions may be added thereto provided the change does not alter the annual
interest rate, redemption price or date, date of maturity or amount payable on
maturity of any then outstanding Bond or conflict with the Trust Indenture Act
of 1939 as then in effect, and provided the holders of 85% in principal amount
of the Bonds secured by said indenture and then outstanding (including, if such
change affect the Bonds of one or more series but less than all series then
outstanding, a like percentage of the then outstanding Bonds of each series
affected by such change, and excluding Bonds owned or controlled by the Company
or by the parties owning at least 10% of the outstanding voting stock of the
Company, as more fully specified in said indenture) consent in writing thereto,
all as more fully set forth in said indenture, as amended and supplemented.

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

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

     The Bonds of this series are subject to redemption as provided in said
supplemental indenture dated December 1, 2003 (No. 1).




<PAGE>

                                       4


     This Bond is transferable, but only as provided in the Authority Indenture
upon surrender hereof, by the registered owner in person or by attorney duly
authorized in writing, at the office of the Trustee; upon any such transfer a
new Bond similar hereto will be issued to the transferee. No service charge
shall be made for any such transfer, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto. The Company and the Trustee and any paying agent may deem
and treat the person in whose name this Bond is registered as the absolute owner
hereof for the purpose of receiving payment of or on account of the principal
hereof and the interest hereon and for all other purposes; and neither the
Company nor the Trustee nor any paying agent shall be affected by any notice to
the contrary.

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

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

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

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

Dated

                                        PUBLIC SERVICE ELECTRIC
                                           AND GAS COMPANY,


                                        By
                                           -------------------------------------
                                                 (Vice) President

(Seal)
Attest:


---------------------------
   (Assistant) Secretary

                     [FORM OF CERTIFICATE OF AUTHENTICATION]
                          CERTIFICATE OF AUTHENTICATION

     This Bond is one of the Bonds of the series designated therein which are
described in the within-mentioned indenture and supplemental indenture dated
December 1, 2003 (No. 1), as secured thereby.

                                        WACHOVIA BANK, NATIONAL ASSOCIATION,
                                           TRUSTEE,


                                        By
                                           -------------------------------------
                                                 Authorized Signatory




<PAGE>

                                       5


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

     WHEREAS, the Company represents that all things necessary to make the bonds
of the Pollution Control Series Y hereinafter described, when duly authenticated
by the Trustee and issued by the Company, valid, binding and legal obligations
of the Company, and to make this supplemental indenture a valid and binding
agreement supplemental to the Indenture, have been done and performed:

     NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH that the Company, in
consideration of the premises and the execution and delivery by the Trustee of
this supplemental indenture, and in pursuance of the covenants and agreements
contained in the Indenture and for other good and valuable consideration, the
receipt of which is hereby acknowledged, has granted, bargained, sold, aliened,
remised, released, conveyed, confirmed, assigned, transferred and set over, and
by these presents does grant, bargain, sell, alien, remise, release, convey,
confirm, assign, transfer and set over unto the Trustee, its successors and
assigns, forever, all the right, title and interest of the Company in and to all
property of every kind and description (except cash, accounts and bills
receivable and all merchandise bought, sold or manufactured for sale in the
ordinary course of the Company's business, stocks, bonds or other corporate
obligations or securities, other than such as are described in Part V of the
Granting Clauses of the Indenture, not acquired with the proceeds of bonds
secured by the Indenture, and except as in the Indenture and herein otherwise
expressly excluded) acquired by the Company since the execution and delivery of
the supplemental indenture dated August 1, 2003, supplemental to the Indenture
(except any such property duly released from, or disposed of free from, the lien
of the Indenture, in accordance with the provisions thereof) and all such
property which at any time hereafter may be acquired by the Company;

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

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

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

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

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

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

                                   ARTICLE I.

                    BONDS OF THE POLLUTION CONTROL SERIES Y.

     The series of bonds authorized by this supplemental indenture to be issued
under and secured by the Indenture shall be designated "First and Refunding
Mortgage Bonds, Pollution Control Series Y"; shall be limited to the aggregate
principal amount of $64,000,000; shall be issued initially to the Authority
Trustee, as assignee of the




<PAGE>

                                       6


Authority, to evidence the Company's obligation to repay the loan to finance a
portion of the costs of the Project made pursuant to the Agreement; and shall
mature and bear interest as set forth in the form of bond hereinbefore
described; provided, however, that the Company shall receive certain credits
against principal and interest obligations as set forth in Section 3.01 hereof.
The date of each bond of the Pollution Control Series Y shall be the interest
payment date next preceding the date of authentication, unless such date of
authentication be an interest payment date, in which case the date shall be the
date of authentication, or unless such date of authentication be prior to the
first interest payment date, in which case the date shall be December 1, 2003.

     Bonds of the Pollution Control Series Y shall be issued as fully registered
bonds in any denomination authorized by the Company. Interest on bonds of the
Pollution Control Series Y shall be payable at such time and in such manner as
interest is payable on the 2003 Series A Authority Bonds, subject to certain
credits against principal and interest as set forth in Section 3.01 hereof and
shall be payable as to both principal and interest in such coin or currency of
the United States of America as at the time of payment shall constitute legal
tender for the payment of public and private debts, at the principal office of
the Trustee, or at the corporate trust office of any paying agent appointed by
the Company.

     Bonds of the Pollution Control Series Y shall be transferable (but only as
provided in the Authority Indenture) upon surrender thereof for cancellation by
the registered owner in person or by attorney duly authorized in writing at said
office of the Trustee.

     The Company hereby waives any right to make a charge for any transfer of
bonds of the Pollution Control Series Y, but the Company may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto.

                                   ARTICLE II.

                REDEMPTION OF BONDS--POLLUTION CONTROL SERIES Y.

     SECTION 2.01. Redemption--Redemption Prices. Bonds of the Pollution Control
Series Y shall be subject to redemption prior to maturity, under the conditions
and upon the payment of the amounts specified in the following subsections,
together in each case with interest accrued to the redemption date:

          (a) at the option of the Company

               (i) whenever the Interest Rate Mode for the 2003 Authority Series
          A Bonds is the Daily Rate or the Weekly Rate, in whole or in part, at
          a redemption price of 100% of the principal amount thereof on any
          Interest Payment Date;

               (ii) whenever the Interest Rate Mode for the 2003 Authority
          Series A Bonds is the Commercial Paper Rate, in whole or in part, at a
          redemption price of 100% of the principal amount thereof on the
          Interest Payment Date for each Commercial Paper Rate Period for a 2003
          Series A Authority Bond or Bonds, such redemption to be in the same
          principal amount of such 2003 Series A Authority Bond or Bonds;

               (iii) whenever the Interest Rate Mode for the 2003 Authority
          Series A Bonds is the Auction Rate, in whole or in part, at a
          redemption price of 100% of the principal amount thereof on the final
          Interest Payment Date for each Auction Period;

               (iv) whenever the Interest Rate Mode for the 2003 Series A
          Authority Bonds is the Term Rate, in whole or in part, on the final
          Interest Payment Date for the then current Term Rate Period and, prior
          to the end of the then current Term Rate Period, at any time during
          the redemption periods and at the redemption prices set forth below,
          plus interest accrued, if any, to the redemption date:




<PAGE>

                                       7


<TABLE>
<CAPTION>
 Original Length of
   Current Term           Commencement of              Redemption Price as
 Rate Period (Years)     Redemption Period           Percentage of Principal
--------------------   --------------------   -----------------------------------
<S>                              <C>          <C>
More than 15 years     Tenth anniversary      102% declining by 1% on each
                       of commencement of     succeeding anniversary of the
                       Term Rate Period       first day of the redemption period
                                              until reaching 100% and thereafter
                                              100%

More than 10 but not   Seventh anniversary    102% declining by 1% on each
more than 15 years     of commencement of     succeeding anniversary of the
                       Term Rate Period       first day of the redemption period
                                              until reaching 100% and thereafter
                                              100%

More than 5 but not    Third anniversary      101% declining by 1% on the next
more than 10 years     of commencement of     succeeding anniversary of the
                       Term Rate Period       first day of the redemption period
                                              and thereafter 100%

More than 2 but not    Second anniversary     100% on and after such second
more than 5 years      of commencement of     anniversary of the first day of the
                       Term Rate Period       redemption period

2 years or less        Non-callable           Non-callable
</TABLE>

          If, at the time of the Company's notice of a change in the Term Rate
     Period pursuant to Section 2.02(c) of the Authority Indenture, or its
     notice of Conversion of the Interest Rate Mode for the 2003 Series A
     Authority Bonds to the Term Rate pursuant to Section 2.02(d) of the
     Authority Indenture, or, when the Interest Rate Mode for the 2003 Series A
     Authority Bonds is the Term Rate, at least 35 days prior to the Purchase
     Date for the 2003 Series A Authority Bonds pursuant to Section 3.01 (b)(i)
     of the Authority Indenture, the Company provides a certification of the
     Remarketing Agent to the Authority Trustee and the Authority that the
     foregoing schedule is not consistent with prevailing market conditions and
     an opinion of nationally recognized bond counsel that a change in the
     redemption provisions of the 2003 Series A Authority Bonds will not
     adversely affect the exclusion from gross income of interest on the 2003
     Series A Authority Bonds for Federal income tax purposes, the foregoing
     redemption periods and redemption prices may be revised effective as of the
     date of such change in the Term Rate Period, the Conversion Date, or that
     Purchase Date, as determined by the Remarketing Agent in its judgment,
     taking into account the then prevailing market conditions, as stipulated in
     such certification, which shall be appended by the Trustee to its
     counterpart of this supplemental indenture. Any such revision of redemption
     periods or redemption prices shall not be considered an amendment of or
     supplement to this supplemental indenture and shall not require the consent
     of any other person or entity.

          (b) in whole (or in part if, in the opinion of nationally recognized
     bond counsel, such partial redemption will preserve the exclusion from
     gross income for Federal income tax purposes of interest on the 2003 Series
     A Authority Bonds remaining outstanding after such redemption) at any time
     at 100% of the principal amount thereof to be redeemed, plus interest
     accrued to the redemption date, within 180 days after a "final
     determination" (i.e., the issuance of a published or private ruling or
     technical advice) of the Internal Revenue Service or a judicial decision in
     a proceeding by any court of competent jurisdiction in the United States
     (from which ruling, advice or decision no further right of appeal exists),
     in all cases in which the Company has participated or been a party or has
     been given an opportunity to participate and has failed to do so (no such
     decree or judgment by any court or action by the Internal Revenue Service
     to be considered final unless the owner of the 2003 Series A Authority
     Bonds involved in such proceeding or action has given the Company and the
     Authority Trustee prompt written notice of the commencement thereof and
     offered the Company, at the Company's expense, the opportunity to control
     the defense thereof) that, as a result of a failure by the Company to
     observe any covenant, agreement, representation or warranty in the
     Agreement, the interest payable on the 2003 Series A Authority Bonds is
     includable in the gross income for Federal income tax purposes of the
     holder thereof, other than a "substantial user" of the Project or a
     "related person" as provided in Section 147 (a) of the Internal Revenue
     Code of 1986, as amended, and the applicable regulations thereunder.




<PAGE>

                                       8


          (c) in whole at 100% of the principal amount thereof whenever the
     Company receives from the Authority Trustee a copy of a written demand sent
     to the Trustee stating that the principal of all outstanding 2003 Series A
     Authority Bonds has been declared to be immediately due and payable because
     of an Event of Default under the Authority Indenture. In such case,
     redemption of the Bonds of the Pollution Control Series Y shall be any date
     selected by the Company, not more than 180 days after receipt by the
     Company of such written demand for redemption.

          (d) to the extent that any of the 2003 Series A Authority Bonds shall
     have become Provider Bonds, (i) on the Provider Bond Redemption Date in an
     amount equal to the aggregate principal amount of Provider Bonds
     outstanding at the expiration of the Liquidity Facility at 100% of the
     principal amount thereof and (ii) in accordance with any other redemption
     provisions set forth in any applicable Standby Bond Purchase Agreement.

     SECTION 2.02. Notice of Redemption. (a) The election of the Company under
subsection (a) of Section 2.01 hereof to redeem any of the bonds of the
Pollution Control Series Y shall be evidenced by a resolution of the Board of
Directors of the Company calling for redemption on a stated date of all or a
stated principal amount thereof. To exercise its option to redeem the bonds of
the Pollution Control Series Y under subsection (a) of Section 2.01 hereof, the
Company shall deliver to the Trustee, the Authority and the Authority Trustee a
certified copy of said resolution calling all or a stated principal amount of
the bonds of the Pollution Control Series Y for redemption on a date not less
than 20 days (35 days if the Interest Rate Mode is the Term Rate) nor more than
65 days from the date said resolution is delivered. The delivery to the
Authority Trustee of a certified copy of such resolution shall constitute notice
to the Authority Trustee of the redemption referred to therein, on the terms
specified therein. The Company shall on or before such redemption date deposit
with the Trustee, as paying agent hereunder, the total applicable redemption
price of all the bonds so called, with interest accrued thereon to the
redemption date, less any credits to which the Company may be entitled pursuant
to Section 3.01 hereof, and the Trustee, as such paying agent, shall apply such
funds on the redemption date to the redemption of the bonds so called.

          (b) The Company shall, within 10 days after the occurrence of a "final
     determination" under subsection (b) of Section 2.01 hereof, deliver to the
     Trustee written notice of such "final determination". The Company shall, by
     resolution of its Board of Directors, fix a redemption date for such
     redemption and shall deliver to the Trustee, the Authority and the
     Authority Trustee a certified copy of said resolution at least 40 days
     prior to the date so selected for redemption. Such redemption date may be
     any day not more than 180 days after the occurrence of such "final
     determination". If the Trustee does not receive written notice of such
     selection by the Company within 140 days after the date of the occurrence
     of such "final determination," then the redemption date shall be the 180th
     day after the occurrence of such "final determination." On or before such
     redemption date, the Company shall deposit with the Trustee, as paying
     agent hereunder, the total redemption price of the bonds so called, with
     interest accrued thereon to the redemption date, less any credits to which
     the Company may be entitled pursuant to Section 3.01 hereof, and the
     Trustee, as such paying agent, shall apply such funds, on the redemption
     date, to the redemption of the bonds so called. The delivery to the
     Authority Trustee of a certified copy of such resolution shall constitute
     notice to the Authority Trustee of the redemption referred to therein on
     the terms specified therein.

          (c) The Company shall, within 10 days after the receipt of a written
     demand under subsection (c) of Section 2.01 hereof, by resolution of its
     Board of Directors, fix a redemption date for such redemption and shall
     deliver to the Trustee, the Authority and the Authority Trustee a certified
     copy of said resolution at least 40 days prior to the date so selected for
     redemption. Such redemption date may be any day not more than 180 days
     after the receipt of such written demand. If the Trustee does not receive
     written notice of such selection by the Company within 140 days after the
     date of the receipt of such written demand, then the redemption date shall
     be the 180th day after the receipt of such written demand. On or before
     such redemption date, the Company shall deposit with the Trustee, as paying
     agent hereunder, the total redemption price of the bonds so called, with
     interest accrued thereon to the redemption date, less any credits to which
     the Company may be entitled pursuant to Section 3.01 hereof, and the
     Trustee, as such paying agent, shall apply such funds, on the redemption
     date, to the redemption of the bonds so called.

     SECTION 2.03. Interest on Called Bonds to Cease. Each bond or portion
thereof of the Pollution Control Series Y called for redemption under Section
2.02 hereof shall be due and payable at the office of the Trustee, as paying
agent hereunder, at the applicable redemption price and on the specified
redemption date, anything herein or in




<PAGE>

                                       9


such bond to the contrary notwithstanding. From and after the date when each
bond or portion thereof of the Pollution Control Series Y shall be due and
payable as aforesaid (unless upon said date the full amount due thereon shall
not be held by or provided to the Trustee, as paying agent hereunder, and be
immediately available for payment), all further interest shall cease to accrue
on such bond or on such portion thereof, as the case may be.

     SECTION 2.04. Bonds Called in Part. If only a portion of any bond of the
Pollution Control Series Y shall be called for redemption pursuant to Section
2.02 hereof, the notice of redemption hereinbefore provided for shall specify
the portion of the principal amount thereof to be redeemed. Upon payment of the
portion so called for redemption, the Trustee, as paying agent hereunder, shall
give prompt written notice thereof to the Company.

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

                                  ARTICLE III.

      CREDITS WITH RESPECT TO THE BONDS OF THE POLLUTION CONTROL SERIES Y.

     SECTION 3.01. Credits. (a) In addition to any other credit, payment or
satisfaction to which the Company is entitled with respect to the Bonds of the
Pollution Control Series Y, the Company shall be entitled credits against
amounts otherwise payable in respect of the Bonds of the Pollution Control
Series Y in an amount corresponding to the amount by which interest due on the
Bonds of the Pollution Control Series Y exceeds the interest due on the 2003
Series A Authority Bonds.

          (b) The Company shall be entitled to credits against amounts otherwise
     payable in respect of the bonds of the Pollution Control Series Y in an
     amount corresponding to (i) the principal amount of any 2003 Series A
     Authority Bond surrendered to the Authority Trustee by the Company or the
     Authority, or purchased by the Authority Trustee, for cancellation and (ii)
     the amount of money held by the Authority Trustee and available and
     designated for or applied toward the payment of principal or redemption
     price of and interest on the 2003 Series A Authority Bonds, as the case may
     be, regardless of the source of payment to the Authority Trustee of such
     moneys; provided, however, that the Company shall not be entitled to any
     such credit with respect to amounts paid to the Authority Trustee pursuant
     to the Bond Insurance Policy. The Trustee, as paying agent hereunder, shall
     give prompt written notice to the Company of any such credit with respect
     to the payment of interest.

          (c) The Trustee, as paying agent hereunder, shall (i) promptly notify
     the Company of each deposit in the Bond Fund under the Authority Indenture,
     (ii) provide evidence to the Company that such deposit has been credited to
     such Fund and (iii) give prompt written notice to the Company of any
     credits with respect to payment of principal or redemption price of and
     interest on the bonds of the Pollution Control Series Y.

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

                                   ARTICLE IV.

                                 MISCELLANEOUS.

     SECTION 4.01. Authentication of Bonds of Pollution Control Series Y. None
of the bonds of the Pollution Control Series Y, the issue of which is provided
for by this supplemental indenture, shall be authenticated by the Trustee except
in accordance with the provisions of the Indenture, as amended and supplemented,
and this supplemental indenture, and upon compliance with the conditions in that
behalf therein contained.

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




<PAGE>

                                       10


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

          (2) except to the extent of 60% (in lieu of 75% as permitted by
     Subdivision A of Section 7 of said Article Two) of the cost or fair value
     to the Company of the additions or improvements forming the basis for such
     authentication of additional bonds.

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

     SECTION 4.04. Use of Facsimile Seal and Signatures. The seal of the Company
and any or all signatures of the officers of the Company upon any of the bonds
of the Pollution Control Series Y may be facsimiles.

     SECTION 4.05. Effective Period of Supplemental Indenture. The preceding
provisions of Articles I, II and III of this supplemental indenture shall remain
in effect only so long as any of the bonds of the Pollution Control Series Y
shall remain outstanding.

     SECTION 4.06. Time for Making of Payment. All payments of principal or
redemption price of and interest on the bonds of the Pollution Control Series Y
shall be made to the Authority Trustee in such funds as shall constitute
immediately available funds when payment is due. In any case where the date of
payment of the principal or redemption price of or interest on the bonds of the
Pollution Control Series Y or the date fixed for redemption of any such bonds
shall be in the city of payment a Saturday, Sunday or a legal holiday or a day
on which banking institutions are authorized by law to close, then such payment
need not be made on such date but may be made on the next succeeding business
day with the same force and effect as if made on the date of maturity or the
date fixed for redemption, and no interest on such payment shall accrue for the
period after such date.

     SECTION 4.07. Effect of Approval of Board of Public Utilities of the State
of New Jersey. The approval of the Board of Public Utilities of the State of New
Jersey of the execution and delivery of these presents and of the issue of any
bonds of the Pollution Control Series Y shall not be construed as approval of
said Board of any other act, matter or thing which requires approval of said
Board under the laws of the State of New Jersey.

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




<PAGE>

                                       11


     IN WITNESS WHEREOF, Public Service Electric and Gas Company, party hereto
of the first part, after due corporate and other proceedings, has caused this
supplemental indenture to be signed and acknowledged or proved by its President
or one of its Vice Presidents and its corporate seal hereunto to be affixed and
to be attested by the signature of its Secretary or an Assistant Secretary; and
Wachovia Bank, National Association, as Trustee, party hereto of the second
part, has caused this supplemental indenture to be signed and acknowledged or
proved by its President, one of its Vice Presidents or one of its Assistant Vice
Presidents and its corporate seal to be hereunto affixed and to be attested by
the signature of one of its Vice Presidents, Assistant Vice Presidents, its
Cashier, one of its Assistant Cashiers, or one of its Corporate Trust Officers.
Executed and delivered this 1st day of December 2003.

Attest:

                                             PUBLIC SERVICE ELECTRIC AND
                                                GAS COMPANY


                                             By        /s/ M. A. Plawner
                                                --------------------------------
                                                         M. A. Plawner
                                                         Vice President


Attest:


    /s/ E.J. Biggins, Jr.
-----------------------------
      E.J. Biggins, Jr.
          Secretary


                                             WACHOVIA BANK, NATIONAL ASSOCIATION


                                             By         /s/ F. Gallagher
                                                --------------------------------
                                                         F. Gallagher
                                                        Vice President


Attest:


        /s/ R. Barnes
-----------------------------
          R. Barnes
   Assistant Vice President




<PAGE>

                                       12


STATE OF NEW JERSEY
COUNTY OF ESSEX       } SS:

     BE IT REMEMBERED, that on this 1st day of December, 2003, before me, the
subscriber, a Notary Public of the State of New Jersey, personally appeared M.A.
Plawner who, I am satisfied, is a Vice President of PUBLIC SERVICE ELECTRIC AND
GAS COMPANY, one of the corporations named in and which executed the foregoing
instrument, and is the person who signed the said instrument as such officer for
and on behalf of such corporation, and I having first made known to him the
contents thereof, he did acknowledge that he signed the said instrument as such
officer, that the said instrument was made by such corporation and sealed with
its corporate seal, that the said instrument is the voluntary act and deed of
such corporation, made by virtue of authority from its Board of Directors, and
that said corporation, the mortgagor, has received a true copy of said
instrument.


                                             /s/ Karina Boto
                                             -----------------------------------
                                             KARINA BOTO
                                             NOTARY PUBLIC OF NEW JERSEY
                                             Commision Expires 3/24/2008

STATE OF NEW JERSEY
COUNTY OF ESSEX       } SS:

     BE IT REMEMBERED, that on this 1st day of December, 2003, before me, the
subscriber, a Notary Public of the State of New Jersey, personally appeared F.
Gallagher who, I am satisfied, is a Vice President of WACHOVIA BANK, NATIONAL
ASSOCIATION, one of the corporations named in and which executed the foregoing
instrument, and is the person who signed the said instrument as such officer,
for and on behalf of such corporation, and I having first made known to him the
contents thereof, he did acknowledge that he signed the said instrument as such
officer, that the said instrument was made by such corporation and sealed with
its corporate seal; and that the said instrument is the voluntary act and deed
of such corporation, made by virtue of authority from its Board of Directors.


                                             /s/ Karina Boto
                                             -----------------------------------
                                             KARINA BOTO
                                             NOTARY PUBLIC OF NEW JERSEY
                                             Commision Expires 3/24/2008




<PAGE>

                                       13


                            CERTIFICATE OF RESIDENCE

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

                                             WACHOVIA BANK, NATIONAL ASSOCIATION


                                             By         /s/ F. Gallagher
                                                --------------------------------
                                                         F. Gallagher
                                                        Vice President