BY-LAWS



                                       OF



                             PUBLIC SERVICE ELECTRIC
                                 AND GAS COMPANY







                                   ----------






                                  As in effect
                                January 18, 2000


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


<PAGE>


                                     BY-LAWS
                                       OF
                     PUBLIC SERVICE ELECTRIC AND GAS COMPANY

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

                                   ARTICLE I.

                                    DIRECTORS


     SECTION  1.  The  Board  of  Directors  shall  consist  of such  number  of
directors, not less than 3 nor more than 16, as shall be fixed from time to time
by the Board of Directors. The directors shall be elected annually at the annual
meeting  of the  stockholders  by  those  stockholders  entitled  to vote at the
election  of  directors.  If the holders of  Preferred  Stock and the holders of
Preferred  Stock-$25  Par are entitled to vote at elections of  directors,  such
stockholders,  voting as a single  class  separately  from the holders of Common
Stock, shall be entitled to elect the smallest number of directors which will be
more than  on-half of the total number of  directors,  and the holders of Common
Stock, voting separately as a single class, shall be entitled to elect all other
directors.  As used in these  By-Laws,  the term "entire  Board" means the total
number of directors which the corporation would have if there were no vacancies.

     Directors  shall hold  office for one year and until their  successors  are
duly elected and  qualified,  but if, in accordance  with the  provisions of the
third  paragraph of Section 6 of Article IX of these By-Laws,  a special meeting
of  stockholders is convened at which a quorum of the holders of Preferred Stock
and the holders of Preferred  Stock-$25  Par is present,  the terms of office of
all directors  shall  terminate,  and at such meeting,  the holders of Preferred
Stock and the  holders of  Preferred  Stock-$25  Par,  voting as a single  class
separately  form the  holders of Common  Stock,  shall be  entitled to elect the
smallest  number of directors  which will be more than one-half the total number
of  directors,  and the holders of Common Stock,  voting  separately as a single
class shall be entitled to elect all other directors.

     If the office of any director becomes vacant, the remaining directors, by a
majority  vote,  may elect a successor,  who shall hold office for the unexpired
term,  and until his successor is duly elected and qualified  except that if the
holders of  Preferred  Stock and the  holders  of  Preferred  Stock-$25  Par are
entitled  to  voting  rights to elect  directors,  any  vacancy  in the Board of
Directors  caused by the death or  resignation  of any  director  elected by the
holders of Preferred  Stock and the holder of Preferred  Stock-$25  Par shall be
entitled to fill upon any increase in the number of directors  shall,  until the
next meeting of the  stockholders  for the election  directors,  in each case be
filled by  majority  vote of the  remaining  or other  directors  elected by the
holders of Preferred Stock and the holders of Preferred Stock-$25 Par.

<PAGE>

     Upon the  termination  of such voting  rights of the  holders of  Preferred
Stock and the holders of  Preferred  Stock-$25  Par,  the terms of office of all
persons who shall have been  elected  directors by vote of such  holders,  or by
vote of the directors elected by such holders,  shall forthwith  terminate,  and
the  vacancies  thereby  created may be filled by majority vote of the remaining
directors, though less than a quorum.

     SECTION 2. The Board of Directors, by the affirmative vote of a majority of
directors in office and  irrespective  of any personal  interest of any of them,
may  establish  reasonable   compensation  of  directors  for  services  to  the
corporation as directors, officers, or otherwise.


                                   ARTICLE II.

                                    OFFICERS

     SECTION  1. The  elective  officers  of the  corporation  shall  include  a
President,  one or more Vice  Presidents,  a  Secretary,  one or more  Assistant
Secretaries,  a Treasurer,  and one or more Assistant  Treasurers,  and may also
include a Chairman of the Board,  one or more Senior  Executive Vice Presidents,
one or more Executive Vice Presidents,  one or more Senior Vice Presidents and a
Chief Nuclear Officer. All elective officers of the corporation shall be elected
by the Board of Directors at the first meeting thereof after the annual election
of  directors.  The Board of Directors  shall also have power,  at any time,  to
elect additional  Senior  Executive Vice Presidents,  Executive Vice Presidents,
Senior Vice  Presidents,  Vice Presidents,  Assistant  Secretaries and Assistant
Treasurers.  The Board of Directors may appoint such other  officers as it shall
from time to time deem  necessary,  who shall have such powers and perform  such
duties as may be  assigned  to them by the  Board of  Directors,  the  Executive
Committee,  or the person exercising the authority of chief executive officer of
the corporation. Any two or more offices may be held by the same person.

     The Board of Directors shall have power to fill any vacancy in any existing
office or to fill any newly created office, at any time.

     The  Chairman  of the Board,  the  President,  each Senior  Executive  Vice
President,  each Executive Vice President, each Senior Vice President, each Vice
President and the Chief  Nuclear  Officer,  severally,  shall have power to sign
deeds, contracts,  and other instruments.  Each elective officer shall have such
powers  and  perform  such  duties  as may be  assigned  to him by the  Board of
Directors,  the Executive Committee, or the chief executive officer, in addition
to any powers and duties that are assigned to him specifically by these By-Laws.

<PAGE>

     The term of office of each  officer  shall be from the time of his election
or  appointment  and  qualification  until  the  first  meeting  of the Board of
Directors  after the last annual  election of  Directors,  or such other term of
office as shall be provided in the  resolution of election or  appointment,  and
until the election or appointment and qualification of his successor, subject to
earlier termination by removal or resignation.

                                  ARTICLE III.

                        CHAIRMAN OF THE BOARD; PRESIDENT;
                        SENIOR EXECUTIVE VICE PRESIDENTS;
               EXECUTIVE VICE PRESIDENTS; SENIOR VICE PRESIDENTS;
                              CHIEF NUCLEAR OFFICER

     SECTION 1. If there be a Chairman  of the  Board,  he shall  preside at all
meetings of the stockholders and of the Board of Directors,  and shall have such
other  powers and  perform  such other  duties as may be  assigned to him by the
Board of Directors or the Executive Committee.

     SECTION 2. If there be a  Chairman  of the  Board,  the Board of  Directors
shall  designate  either the Chairman of the Board or the President as the chief
executive  officer of the  corporation  with plenary powers of  supervision  and
direction of the business  and affairs of the  corporation,  unless such offices
are  occupied by the same  person.  If there be no  Chairman  of the Board,  the
President shall be the chief executive officer.

     SECTION 3. If there be a Chairman of the Board and if he be  designated  as
the chief executive officer of the corporation,  the President shall have charge
of  the  coordination  and  supervision  of  all  matters  of  operation  of the
corporation.  In the absence of the Chairman of the Board,  the President  shall
have the powers and perform the duties of the Chairman of the Board.

     SECTION 4. The Senior  Executive Vice Presidents,  severally,  in the order
designated  by  the  chief  executive  officer,  shall,  in the  absence  of the
president, have the powers and perform the duties of the President, and if there
be a Chairman of the Board,  they shall,  in the absence of the  Chairman of the
Board and the President,  have the powers and perform the duties of the Chairman
of the Board.

     SECTION  5.  The  Executive  Vice  Presidents,   severally,  in  the  order
designated  by  the  chief  executive  officer,  shall,  in the  absence  of the
President and the Senior Executive Vice Presidents,  have the powers and perform
the  duties of the  President,  and if there be a Chairman  of the  Board,  they
shall,  in the absence of the Chairman of the Board and the President,  have the
powers and perform the duties of the Chairman of the Board.

<PAGE>

     SECTION 6. The Senior Vice Presidents,  severally,  in the order designated
by the chief  executive  officer,  shall,  in the absence of the President,  the
Senior  Executive Vice  Presidents and the Executive Vice  Presidents,  have the
powers and  perform the duties of the  President,  and if there be a Chairman of
the Board,  they  shall,  in the  absence  of the  Chairman  of the  Board,  the
President,   the  Senior  Executive  Vice  Presidents  and  the  Executive  Vice
Presidents, have the powers and perform the duties of the Chairman of the Board.

     SECTION  7.  The  Chief  Nuclear  Officer  shall,  in  the  absence  of the
President,  the Senior Executive Vice Presidents,  the Executive Vice Presidents
and the Senior  Vice  Presidents  have the powers and  perform the duties of the
President,  and if there be a Chairman of the Board,  the Chief Nuclear  Officer
shall,  in the absence of the Chairman of the Board,  the  President  the Senior
Executive Vice  Presidents,  the Executive  Vice  Presidents and the Senior Vice
Presidents have the powers and perform the duties of the Chairman of the Board.

                                   ARTICLE IV.

                                VICE PRESIDENTS

     SECTION 1. The Vice Presidents,  severally,  in the order designated by the
chief  executive  officer,  shall,  in the absence of the President,  the Senior
Executive Vice Presidents,  the Executive Vice  Presidents,  and the Senior Vice
Presidents,  have the powers and  perform  the duties of the  President,  and if
there be a Chairman of the Board,  they shall, in the absence of the Chairman of
the Board,  the President,  the Senior  Executive Vice President,  the Executive
Vice Presidents and the Senior Vice presidents,  have the powers and perform the
duties of the Chairman of the Board.


                                   ARTICLE V.

                                   SECRETARY

     SECTION  1.  The  Secretary  shall  keep  minutes  of all  meetings  of the
stockholders of the Board of Directors and of the Executive Committee, and shall
give notices of meetings of the stockholders,  of the Board of Directors, and of
the  Executive  Committee.  He shall have custody of all deeds,  contracts,  and
other instruments,  documents and records, except as otherwise provided in these
By-Laws,  or by the Board of Directors,  and shall attend to such correspondence
of the  corporation  as the Board of  Directors or the chief  executive  officer
shall direct. He shall be the custodian of the seal of the corporation and shall
affix it to any  instrument  requiring  the same,  except as otherwise  provided
herein or by the Board of Directors.


<PAGE>

                                   ARTICLE VI.

                             ASSISTANT SECRETARIES

     SECTION 1. Each Assistant Secretary shall have such powers and perform such
duties  as may be  assigned  to him by  the  Secretary.  In the  absence  of the
Secretary, the Assistant Secretaries,  in the order designated by the Secretary,
shall have the powers and perform the duties of the Secretary.

                                  ARTICLE VII.

                                   TREASURER

     SECTION  1.  The   Treasurer   shall  have  charge  of  all   receipts  and
disbursements of the corporation and shall be the custodian of the corporation's
funds.  He shall have full authority to receive and give receipts for all moneys
due and payable to the corporation from any source  whatever,  and to endorse or
cause to be endorsed checks,  drafts,  warrants,  and other  instruments for the
payment of money in its name and on its behalf,  and full discharge for the same
to give.  The funds of the  corporation  shall be  deposited in its name in such
depositories  as may be designated  from time to time by the Board of Directors,
or by the Treasurer if the Board of Directors  shall authorize him to do so. All
checks, drafts and other instruments for the payment of money, and all notes and
other evidences of indebtedness, issued in the name of the corporation, shall be
signed by such officer or officers,  employee or employees,  agent or agents, of
the corporation,  and in such manner, including the use of facsimile signatures,
as shall be determined  from time to time by the Board of  Directors,  or by the
Treasurer  if  the  Board  of  Directors   shall  authorize  him  to  make  such
determination.  A report of the financial  condition of the corporation shall be
made by the Treasurer  whenever  requested by the chief  executive  officer.  If
required  by the  Board  of  Directors  he  shall  give  bond  for the  faithful
performance  of his duties,  in such sum and with such surety or sureties as the
Board of Directors may determine.

                                  ARTICLE VIII.

                              ASSISTANT TREASURERS

     SECTION 1. Each Assistant Treasurer shall have such powers and perform such
duties  as may be  assigned  to him by  the  Treasurer.  In the  absence  of the
Treasurer,  the Assistant Treasurers,  in the order designated by the Treasurer,
shall have the powers and perform the duties of the Treasurer.

<PAGE>
                                   ARTICLE IX.

                                    MEETINGS

     SECTION  1.  The  meetings  of the  stockholders  shall,  unless  otherwise
provided  by law,  be held at such  place,  within or  without  the State of New
Jersey,  as may be fixed by the Board of  Directors  and stated in the notice of
the meeting.

     Each annual meeting of the  stockholders  for the election of directors for
the  ensuing  year,  and for the  transaction  of such other  business as may be
brought before the meeting,  shall be held at such time, not more than 13 months
after the last annual meeting, as may be fixed by the Board of Directors.


     SECTION 2. Except as herein or in the Restated Certificate of Incorporation
expressly  provided to the contrary or as otherwise  required by law, all voting
rights in the corporation  shall be vested  exclusively in the holders of Common
Stock, and the holders of Preferred Stock and the holders of Preferred Stock-$25
Par  shall  have no  right  to  vote or to  participate  in any  meeting  of the
stockholders of the corporation or to receive any notice of any such meeting.

     Except as herein or in the Restated Certificate of Incorporation  expressly
provided to the  contrary or as  otherwise  required by law, at all  meetings of
stockholders  the holders of Common Stock shall be entitled to cast one vote for
each share of Common Stock held.

     At any meeting of the  stockholders of the corporation at which the holders
of Preferred Stock and the holders of Preferred  Stock-$25 Par shall be entitled
to vote as a single class,  the holders of Preferred  stock shall be entitled to
cast one  vote  for  each  share of  Preferred  Stock  held and the  holders  of
Preferred  Stock-$25  Par shall be entitled to cast 1/4 vote for each  Preferred
Stock-$25 Par held.

<PAGE>
     At all elections of directors each holder of Common Stock shall be entitled
to as many  votes as shall  equal  the  number of his  shares  of  Common  Stock
multiplied  by the number of  directors  to be elected,  and, in each case,  the
stockholder may cast all such votes for a single director or may distribute them
among the number to be voted for,  or any two or more of them as he may see fit;
provided  that  whenever  the  holders  of  Preferred  Stock and the  holders of
Preferred  Stock-$25 Par, voting  separately as a single class,  are entitled to
elect directors, (i) each holder of Preferred Stock shall be entitled to as many
votes as shall  equal the  numbers  of his shares of stock,  and each  holder of
Preferred  Stock-$25  Par  shall be  entitled  to as many  votes as shall  equal
one-fourth  the number of his shares of stock,  in each case  multiplied  by the
number of  directors  to be elected by the  holders of  Preferred  Stock and the
holders of Preferred  Stock-$25  Par, and (ii) each holder of Common Stock shall
be  entitled  to as many votes as shall equal the number of his shares of stock,
multiplied  by the number of  directors  to be elected by the  holders of Common
Stock.

     SECTION 3. So long as any Preferred Stock or Preferred  Stock-$25 Par shall
be outstanding, if dividends upon any shares of Preferred Stock-$25 Par shall be
in arrears to an amount  equal to the annual  dividend  thereon,  the holders of
Preferred  Stock  and the  holders  of  Preferred  Stock-$25  Par  shall  become
entitled,  to the extent, herein provided, to vote at all elections of directors
for the corporation and to receive notice of  stockholders'  meetings to be held
for such purpose.  Such voting rights of the holders of Preferred  Stock and the
holders of Preferred  Stock-$25 Par to elect  directors shall continue until all
the accumulated and unpaid dividends on Preferred Stock and Preferred  Stock-$25
Par shall have been paid,  whereupon all such voting rights shall cease, subject
to being again revived from time to time upon the  recurrence of the  conditions
described above as giving rise thereto.

     SECTION 4. Every stockholder  entitled to vote at a meeting of stockholders
or to express consent or dissent without a meeting may authorize  another person
or persons to act for him by proxy. No proxy shall be valid after 11 months from
the date of its execution,  unless a longer time is expressly  provided therein,
but in no event  shall a proxy  be  valid  after  three  years  from the date of
execution.  A proxy  shall  not be  revoked  by the  death  or  incapacity  of a
stockholder   but  shall  continue  in  force  until  revoked  by  the  personal
representative  or guardian of the  stockholder.  The presence at any meeting of
any  stockholder  who has given a proxy shall not revoke  such proxy  unless the
stockholder  shall file written notice of such  revocation with the secretary of
the meeting prior to the voting of such proxy.

     A person named in a proxy as the attorney or agent of a stockholder may, if
the proxy so provides,  substitute another person to act in his place, including
any  other  person  named  as an  attorney  or  agent  in the  same  proxy.  The
substitution  shall not be effective  until an instrument  effecting it is filed
with the Secretary.

     SECTION 5. All elections for directors shall be by ballot, and the polls at
every such election shall remain open so long as may be reasonably  necessary to
permit all stockholders  entitled to vote at such meeting,  present in person or
by proxy, to cast their votes.

     SECTION 6. Special  meetings of the  stockholders may be called at any time
by the Board of Directors or by the chief executive  officer or upon the written
request of the holders of the capital stock entitled to cast a majority of votes
thereat.

<PAGE>
     Except as otherwise  provided by law, and unless waived,  written notice of
the time, place and purposes of every meeting of stockholders shall be given not
less  than 10 nor more  than 60 days  before  the date of the  meeting,  to each
stockholder of record entitled to vote at the meeting,  either  personally or by
mailing a notice to him at his last post office  address  appearing on the books
of the corporation.

     At any time after the  accrual to the  holders of  Preferred  Stock and the
holders  of  Preferred  Stock-$25  Par of voting  rights to elect  directors,  a
special meeting of the stockholders for the purpose of electing  directors shall
be held upon not less than 30 days'  notice  upon call of the  Secretary  at the
written  request  of any  holder  of  shares  of  Preferred  Stock or  Preferred
Stock-$25  Par at the time  outstanding,  or, if the  Secretary  should  fail or
neglect to call such meeting within 30 days after receipt of such request,  then
upon call by any such holder.

     SECTION 7. At any meeting of the stockholders the holders of stock entitled
to cast a majority of the votes at the  meeting,  present in person or by proxy,
shall  constitute  a quorum of the  stockholders  for all  purposes  unless  the
representation of a larger number shall be required by law, and in that case the
representation of the number so required shall constitute a quorum.

     If the  holders of the amount of stock  necessary  to  constitute  a quorum
shall  fail to attend in person or by proxy at the time and place  fixed for any
meeting of the  stockholders,  the meeting may be adjourned from time to time by
the vote of the  majority of the votes cast by the  holders of stock  present in
person or  represented  by proxy at such meeting,  without  notice other than by
announcement  at the meeting,  and at any such adjourned  meeting held more than
one week after such time the holders of stock  entitled to cast 40% of the votes
at such meeting,  present in person or represented by proxy,  shall constitute a
quorum of the  stockholders  for all  purposes  unless the  representation  of a
larger number shall be required by law, and in that case the  representation  of
the number so required shall constitute a quorum. At any such adjourned meeting,
whenever  held,  at  which a  quorum  shall  be  present,  any  business  may be
transacted which might have been transacted at the meeting originally called.

     In any case  where  the  holders  of  Preferred  Stock and the  holders  of
Preferred  Stock-$25 Par are entitled to vote  separately as a single class,  or
the holders of Common Stock are entitled to vote  separately  as a single class;
meetings of each such class may be held and adjourned (by the vote of a majority
of the votes cast by the  holders  of stock of such  class  present in person or
represented by proxy at such meeting)  without notice other than by announcement
at the meeting,  separately or together,  and a quorum of each such class at any
meeting or adjourned  meeting  thereof shall be the same percentage of the votes
entitled to be cast by the stockholders of such class as is hereinabove required
for a quorum of stockholders of the corporation entitled to vote at a meeting or
adjourned meeting as the case may be.
<PAGE>
     SECTION 8. Regular meetings of the Board of Directors shall be held monthly
unless otherwise determined by resolution of the Board.

     Special meetings of the Board of Directors may be called at any time by the
Chairman of the Board, or by the President if he be the chief executive officer.
The Secretary shall also call such meetings on the written request on a majority
of the directors.

     No notice shall be required for regular meetings of the Board of Directors.
The meeting for organization may be held on the day and after the annual meeting
of stockholders.  At least two days' notice of a special meeting of the Board of
Directors  shall be  given,  but this  notice  may be waived  in  writing  or by
telegraph,  either  before or after the  meeting.  A meeting may be held without
notice at any time when all the directors are present.

     At all  meetings of the Board of  Directors a majority of the  directors in
office, or one-third of the entire Board, whichever is greater, shall constitute
a quorum for the transaction of business. A less number than a quorum,  however,
may meet and adjourn to any day.

     SECTION  9. The Board of  Directors  may,  in  advance  of any  meeting  of
stockholders,  appoint  one or  more  inspectors  to act at the  meeting  or any
adjournment  thereof.  If  inspectors  are  not so  appointed  by the  Board  of
Directors  or shall  fail to  qualify,  the  person  presiding  at a meeting  of
stockholders  may,  and on the  request  of any  stockholder  entitled  to  vote
thereat, shall make such appointment.  In case any person appointed as inspector
fails to appear or act,  the  vacancy may be filled by  appointment  made by the
Board of Directors in advance of the meeting of  stockholders  or at the meeting
by the person presiding at the meeting. Each inspector, before entering upon the
discharge of his duties,  shall take and sign an oath  faithfully to execute the
duties of inspector at such meeting with strict  impartiality  and  according to
the best of his  ability.  No person shall be elected a director at a meeting at
which he has served as an inspector.

                                   ARTICLE X.

                        RECORD DATE FOR DETERMINATION OF
                             RIGHT OF STOCKHOLDERS



<PAGE>
     SECTION 1. For the  purpose of  determining  the  stockholders  entitled to
notice of or to vote at any meeting of stockholders or any adjournment  thereof,
or to express consent to or dissent from any proposal without a meeting,  or for
the  purpose of  determining  stockholders  entitled  to receive  payment of any
dividend or allotment of any right, or for the purpose of any other action,  the
Board of Directors  may fix, in advance,  a date as the record date for any such
determination of stockholders. Such date shall not be more than 60 nor less than
10 days  before  the date of such  meeting,  nor more than 60 days  prior to any
other action.  When a determination of stockholders  entitled to notice of or to
vote at any meeting of stockholders has been so made, such  determination  shall
apply to any  adjournment  thereof,  unless the Board of  Directors  fixes a new
record date for the adjourned meeting.


                                   ARTICLE XI.

                                   COMMITTEES

     SECTION 1. The Board of Directors,  by resolution  adopted by a majority of
the entire Board, may appoint from among its members an Executive  Committee and
one or more other committees. Except as otherwise provided by law, the Executive
Committee  shall  have  and may  exercise  all the  authority  of the  Board  of
Directors when the Board is not in session, and each such other committee of the
Board  shall  have and may  exercise  the  authority  of the Board to the extent
provided in the resolution of appointment.

     The Board of Directors,  by resolution  adopted by a majority of the entire
Board,  may (a) fill any vacancy in any committee of the Board,  (b) appoint one
or more directors to serve as alternate members of any such committee, to act in
the absence or disability of members of any such  committee  with all the powers
of such  absent or disabled  members,  (c)  abolish  any such  committee  at its
pleasure,  and (d) remove any director from  membership on such committee at any
time, with or without cause.

     Actions taken at a meeting of any committee of the Board of Directors shall
be reported to the Board at its next meeting  following such committee  meeting;
except  that,  when the  meeting of the Board is held  within two days after the
committee meeting,  such report shall, if not made at the first meeting, be made
to the Board at its second meeting following such committee meeting.

     SECTION 2. The Board of  Directors  may  appoint and  prescribe  the powers
duties  of  other  committees,  the  members  of  which  may be but  need not be
directors and shall serve at the pleasure of the Board.

     SECTION 3. One-third of the entire committee, or two members,  whichever is
greater, shall constitute a quorum for the transaction of business.

     SECTION 4. Each committee shall fix its own rules of procedure,  shall meet
where and as provided by such rules of procedure or by  resolution  of the Board
of Directors,  shall keep full records of its  proceedings and shall report from
time to time to the Board, as called upon by the Board.
<PAGE>
                                  ARTICLE XII.

                   VOTING UPON STOCK OWNED BY THE CORPORATION

     SECTION 1. Unless otherwise ordered by the Board of Directors, the Chairman
of the Board, the President, the Senior Executive Vice Presidents, the Executive
Vice Presidents, the Senior Vice Presidents, and the Vice Presidents, severally,
shall each have full power and authority on behalf of the corporation to attend,
act, and vote at any meeting of the  stockholders  of any  corporation  in which
this  corporation  may hold stock,  and to appoint one or more other  persons as
proxy or proxies to attend,  act, and vote at any such meeting,  and such office
or such  proxy or  proxies  shall  possess  and may  exercise  on behalf of this
corporation  any and all rights and powers  incident  to its  ownership  of such
stock.  The Board of Directors or the Executive  Committee  from time to time by
resolution may confer like powers upon any other person or persons.

                                  ARTICLE XIII.

                                      STOCK

     SECTION 1. The  certificates  which  shall be issued for shares of stock in
this corporation shall be signed by the Chairman of the Board, the President, or
a Vice  President,  and either the Treasurer or an Assistant  Treasurer,  or the
Secretary or an Assistant  Secretary.  If the certificate is  countersigned by a
transfer  agent  or  registrar,  who  is  not  an  officer  or  employee  of the
corporation, any and all other signatures may be facsimiles.

     SECTION 2. The shares issued by this corporation shall be transferable only
on the books of the  corporation  by the holder or owner thereof in person or by
power of attorney, on surrender of the certificate therefor.

     SECTION  3. The  Treasurer  shall make and  certify a complete  list of the
stockholders  entitled to vote at a meeting of  stockholders  or any adjournment
thereof.  Such list  shall be  arranged  alphabetically  within  each  class and
series, with the address of, and the number of shares held by, each stockholder,
shall be produced at the time and the place of the meeting, and shall be subject
to the inspection of any stockholder during the whole time of the meeting.


                                  ARTICLE XIV.

                                   FISCAL YEAR

     SECTION 1. The fiscal year of the  corporation  shall begin on January 1 of
each year.

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                                   ARTICLE XV.

                                      SEAL

     SECTION 1. The seal of the corporation shall be circular in form, and shall
have inscribed  thereon the following words and figures "PUBLIC SERVICE ELECTRIC
AND GAS COMPANY INCORPORATED 1924".

                                  ARTICLE XVI.

                                   AMENDMENTS

     SECTION 1.  Except as  otherwise  provided by law,  the Board of  Directors
shall have the power to make, alter, or repeal any by-laws.  By-Laws made by the
Board may be altered or repealed and new by-laws made, by the stockholders.


                                  ARTICLE XVII.

                            ADVANCEMENT OF EXPENSES

     SECTION 1. Expenses  incurred by any person made, or threatened to be made,
a party to any pending, threatened or completed civil, criminal,  administrative
or  arbitrative  action,  suit or  proceeding  and any appeal  therein  (and any
inquiry or investigation which could lead to such action, suit or proceeding) by
reason of the fact that he is or was a  director,  officer  or  employee  of the
corporation or serves or served any other  enterprise as a director,  officer or
employee at the request of the corporation,  shall be paid by the corporation in
advance of the final disposition of the action, suit or proceeding promptly upon
receipt of an undertaking by or on behalf of such person to repay such amount if
it shall  ultimately  be  determined  that  such  person is not  entitled  to be
indemnified by the corporation.