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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K
                                   (Mark One)
             [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2000
                                       OR
              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                 For the transition period from ------ to ------


Commission     Registrant, State of Incorporation,            I.R.S. Employer
File Number    Address, and Telephone Number                  Identification No.
-----------    ----------------------------------------   ----------------------
333-83635            PSE&G Transition Funding LLC               22-3672053
                (A Delaware limited liability company)
                           80 Park Plaza - T4D
                               P.O. Box 1171
                      Newark, New Jersey 07102-1171
                               973 297-2227

        Securities registered pursuant to Section 12 (b) of the Act: NONE

        Securities registered pursuant to Section 12 (g) of the Act: NONE

               Documents incorporated by reference: Not Applicable

Indicate  by  check  mark  whether the   registrant  (1)  has  filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrants were required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes [ ] No [X ]

Indicate  by  check  mark if  disclosure of  delinquent  filers pursuant to Item
405 of regulation S-K is not contained herein, and will not be contained, to the
best  of  the  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [ ]

Registrant is  a  wholly owned  subsidiary  of  Public  Service Electric and Gas
Company.  Registrant meets the conditions set forth in General Instruction I (1)
(a) and (b) of Form 10-K and is filing this Annual  Report on Form 10-K with the
reduced disclosure format authorized by General Instruction I.


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<PAGE>

                                TABLE OF CONTENTS
                                -----------------
                                                                            Page
                                                                            ----
PART I
------
Item 1.  Business..........................................................    1
Item 2.  Properties........................................................    2
Item 3.  Legal Proceedings.................................................    2
Item 4.  Submission of Matters to a Vote of Security Holders...............    2

PART II
-------
Item 5.  Market for Registrant's Common Equity and Related Stockholder
           Matters.........................................................    3
Item 6.  Selected Financial Data...........................................    3
Item 7.  Management's Discussion and Analysis of Financial Condition and
           Results of Operations...........................................    3
         Forward Looking Statements........................................    3
Item 7A. Qualitative and Quantitative Disclosures About Market Risk........    4
Item 8.  Financial Statements and Supplementary Data.......................    4
         Balance Sheets....................................................    5
         Notes to Financial Statements.....................................    6
         Independent Auditors' Reports.....................................    9
Item 9.  Changes in and Disagreements With Accountants on Accounting and
           Financial Disclosure............................................   10

PART III
--------
Item 10. Directors and Executive Officers of the Registrants...............   10
Item 11. Executive Compensation............................................   10
Item 12. Security Ownership of Certain Beneficial Owners and Management....   10
Item 13. Certain Relationships and Related Transactions....................   10

PART IV
-------
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K...   10
         Signatures........................................................   11
         Exhibit Index.....................................................   12
<PAGE>
                                     PART I
                                     ------

ITEM 1. BUSINESS

     PSE&G  Transition  Funding LLC (Transition  Funding) is a Delaware  limited
liability  company  located at 80 Park Plaza,  Newark,  New Jersey 07102 and was
formed solely to purchase PSE&G's bondable transition property (BTP) as provided
for in the bondable  stranded cost rate order (Finance Order),  discussed below.
Transition  Funding  is a  bankruptcy-remote  financing  entity  and is a direct
wholly-owned  special  purpose  subsidiary  of Public  Service  Electric and Gas
Company (PSE&G),  an operating public utility company engaged principally in the
transmission,  distribution  and sale of electric  energy and gas service in New
Jersey.  PSE&G is a direct wholly-owned  subsidiary of Public Service Enterprise
Group Incorporated (PSEG).

     Following  the  enactment  of the New Jersey  Electric  Discount and Energy
Competition  Act  (Energy  Competition  Act),  the New  Jersey  Board of  Public
Utilities  (BPU) rendered a Final Order (Final Order) in August 1999 relating to
PSE&G's rate unbundling, stranded costs and restructuring proceedings providing,
among other things, for PSE&G to recover up to $2.94 billion (net of tax) of its
generation-related  stranded costs through  securitization of $2.4 billion (plus
an estimated $125 million of associated transaction costs) and an opportunity to
recover up to $540 million (net of tax) of its unsecuritized  generation-related
stranded  costs on a net present  value  basis.  The  stranded  costs  represent
various   generation-related   investments  and  other   obligations  that  were
anticipated  to be  unrecoverable  through  market-based  rates in a competitive
electricity generation retail market.

     Following the issuance of the Final Order, the BPU issued the Finance Order
approving  PSE&G's petition  relating to the  securitization  transaction  which
authorized,  among other things,  the imposition of a non-bypassable  transition
bond charge (TBC) on PSE&G's  customers;  the sale of PSE&G's  property right in
such charge to a  bankruptcy-remote  financing entity;  the issuance and sale of
$2.525  billion of  transition  bonds by such entity as  consideration  for such
property right,  including an estimated $125 million of transaction  costs;  and
the application by PSE&G of the transition  bond proceeds to retire  outstanding
debt and/or equity.

     In October and November 1999,  appeals were filed  challenging the validity
of the  Finance  Order,  as well as the  Final  Order.  On April 13,  2000,  the
Appellate  Division of the New Jersey  Superior Court  unanimously  rejected the
arguments made by appellants and affirmed the Final Order and Finance Order.  In
May 2000,  the  appellants  requested  the New  Jersey  Supreme  Court to review
certain aspects of the Appellate Division decision. In July 2000, the New Jersey
Supreme Court granted the requests of the New Jersey Business User's  Coalition,
the New Jersey  Ratepayer  Advocate (RPA) and Co-Steel  Raritan  (Co-Steel),  an
individual  PSE&G  customer.  On December 6, 2000,  by a vote of 4 to 1, the New
Jersey  Supreme  Court issued its order  affirming the judgment of the Appellate
Division. The 10-day period during which a party may request  reconsideration of
this order has expired and thus the New Jersey  Supreme Court decision is final.
As with any New Jersey Supreme Court decision,  a party may request the court to
enlarge this 10-day period under its rules. However, Transition Funding believes
that,  in light of the language of the court's order  determining  that it is in
the public  interest to expedite the  disposition  of the  appeals,  this relief
would be  extraordinary  and that  reconsideration  would not be  granted in any
event.  Although the opinions of the New Jersey Supreme Court justices  relating
to the order have not been  issued,  that does not affect  the  finality  of the
order.

     On  March  6,  2001,  Co-Steel  filed a  Petition  of  Writ  of  Certiotari
(Petition)  with the United States  Supreme Court seeking  limited review of the
New  Jersey  Supreme  Court   decision,   the  granting  of  which  is  entirely
discretionary  with the Court.  In order to be considered,  the Petition must be
made within 90 days of the final state supreme court order and must  demonstrate
an important federal question was decided by that court. The Clerk of the United
States Supreme Court has directed that briefs in opposition to the Petition will
be due 30 days after the New Jersey  opinions are  received.  On March 19, 2001,
the RPA filed a letter with the Clerk  asking the Court to confirm  that the RPA
was not  otherwise  out of  time to file a  Petition.  The  Clerk  indicated  in
response  that the time for  requesting  certiotari  began to run on December 6,
2000.

     On January 31, 2001, Transition Funding issued $2.525 billion of transition
bonds in eight classes with maturities  ranging from 1 year to 15 years. The net
proceeds of the issuance were utilized to acquire PSE&G's  property right in the
TBC. The transition bonds are collateralized by the BTP created under the Energy
Competition  Act  and  the  related  Finance  Order.   The  BTP  represents  the
irrevocable  right to  recover,  through  a TBC  billed  by PSE&G to its  retail
electric  customers within PSE&G's service  territory,  an amount  sufficient to
pay:

     o    the interest,  fees, expenses,  costs, charges, credit enhancement and
          premiums, if any, associated with the transition bonds, and

     o    the principal amount of the transition bonds.


<PAGE>
     As the TBC is a usage-based charge based on access to PSE&G's  transmission
and  distribution  system,  the TBC will be assessed to customers  regardless of
whether the customers purchase electricity from PSE&G or a third party supplier.
Also,  if  on-site   generation   facilities   that  are  connected  to  PSE&G's
transmission and distribution system produce power that is delivered to off-site
retail  customers in New Jersey,  the  transition  bond charge will apply to the
sale or delivery of that power.

     On each payment date,  principal and interest on the transition  bonds will
be paid from the following sources:

     o    transition bond charge collections remitted by the servicer (PSE&G) to
          the issuer (Transition Funding)

     o    amounts from any third party credit enhancement

     o    investment earnings on amounts held in accounts  established under the
          indenture agreement

     o    amounts payable to the issuer under any interest rate swap agreements

     o    other amounts available in the trust accounts held by the trustee.

     Transition Funding has no employees.  Under the servicing agreement entered
into by Transition Funding and PSE&G concurrently with the issuance of the first
Series of Bonds,  PSE&G,  as  servicer,  will be  required to collect the TBC on
behalf of Transition  Funding.  Transition  Funding will pay an annual servicing
fee to PSE&G  equal  to  0.05% of the  initial  balance  of  Bonds  issued.  The
servicing fee will also be recovered through the TBC.

ITEM 2. PROPERTIES

     Transition Funding does not own any tangible property. The primary asset of
Transition Funding is the BTP described in Item 1. Business.

ITEM 3. LEGAL PROCEEDINGS

     None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     Omitted  pursuant to conditions set forth in General  Instruction I of Form
10-K.

<PAGE>
                                     PART II
                                     -------

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     All outstanding equity interests in Transition Funding are owned by PSE&G.

ITEM 6. SELECTED FINANCIAL DATA

     Omitted  pursuant to conditions set forth in General  Instruction I of Form
10-K.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

     The following  analysis of  Transition  Funding's  financial  condition and
results  of  operations  is  in  an  abbreviated   format  pursuant  to  General
Instruction I of Form 10-K. Such analysis should be read in conjunction with the
financial statements attached hereto.

     Transition  Funding had no  operations  during  2000.  On January 31, 2001,
Transition  Funding issued $2.525  billion of transition  bonds in eight classes
with  maturities  ranging  from 1 year  to 15  years.  The net  proceeds  of the
issuance were utilized to acquire PSE&G's property right in the TBC (see Item 1.
Business).  Transition Funding will use collections of the TBC to make scheduled
principal and interest payments on the transition bonds.

     As of December 31, 2000,  Deferred  Issuance Costs were  approximately  $37
million.  As of January 31, 2001,  Deferred Issuance Costs increased as a result
of  Transition  Funding's  significant  costs  relating  to the  issuance of the
transition bonds,  including costs of a hedging  arrangement as permitted by the
Finance  Order.  Costs in excess of the $125  million of  estimated  transaction
costs  provided for in the Finance  Order will be  recovered  on a  subordinated
basis by  Transition  Funding  through the TBC.  The TBC rate was  effective  on
February  7,  2001,  in  accordance   with  the  Final  Order.   For  additional
information, see Note 6. Subsequent Events.

FORWARD LOOKING STATEMENTS

     Except for the  historical  information  contained  herein,  certain of the
matters discussed in this report constitute "forward-looking  statements" within
the  meaning of the  Private  Securities  Litigation  Reform  Act of 1995.  Such
forward-looking  statements are subject to risks and  uncertainties  which could
cause  actual  results  to  differ  materially  from  those  anticipated.   Such
statements are based on management's  beliefs as well as assumptions made by and
information  currently  available to  management.  When used  herein,  the words
"will",  "anticipate",   "intend",  "estimate",   "believe",  "expect",  "plan",
"potential",  variations of such words and similar  expressions  are intended to
identify forward-looking statements. Transition Funding undertakes no obligation
to publicly update or revise any forward-looking statements, whether as a result
of new information,  future events or otherwise. The following review of factors
should not be construed as exhaustive or as any admission regarding the adequacy
of  disclosures  made by Transition  Funding prior to the effective  date of the
Private Securities Litigation Reform Act of 1995.

     In addition to any assumptions  and other factors  referred to specifically
in connection  with such  forward-looking  statements,  factors that could cause
actual   results  to  differ   materially   from  those   contemplated   in  any
forward-looking  statements  include,  among others,  the  following:  state and
federal  legal  or  regulatory  developments;   national  or  regional  economic
conditions;  market demand and prices for energy;  weather variations  affecting
customer energy usage; the effect of continued electric industry  restructuring;
operating  performance of PSE&G's facilities and third party suppliers;  and the
payment  patterns  of  customers  including  the rate of  delinquencies  and the
accuracy of the collections curve.

ITEM 7A. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

     The market risk inherent in Transition  Funding's  transition  bonds is the
potential  loss  arising  from  adverse  changes in interest  rates.  Transition
Funding  has entered  into an  interest  rate swap on its sole class of floating
rate transition  bonds (see Note 6. Subsequent  Events).  The interest rate swap
effectively converts the existing floating rate debt into fixed rate borrowings.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

<PAGE>
<TABLE>
<CAPTION>

                          PSE&G TRANSITION FUNDING LLC
                                 BALANCE SHEETS


                                                    December 31,          December 31,
                                                        2000                  1999
                                                   --------------        -------------
<S>                                                  <C>                    <C>
Assets
     Cash                                             $     1,000           $    1,000
     Deferred Issuance Costs                           36,619,003            1,477,090
                                                   --------------        -------------
          Total Assets                                $36,620,003           $1,478,090
                                                   ==============        =============

Liabilities
     Payable to Member                                $36,619,003           $1,477,090
                                                   --------------        -------------
          Total Liabilities                            36,619,003            1,477,090

Member's Equity                                             1,000                1,000
                                                   --------------        -------------
          Total Liabilities and Member's Equity       $36,620,003           $1,478,090
                                                   ==============        =============
See Notes to Balance Sheets.
</TABLE>

<PAGE>
                         NOTES TO FINANCIAL STATEMENTS

Note 1.  Nature of Operations

     PSE&G  Transition  Funding LLC (Transition  Funding),  a limited  liability
company,  was formed  under the laws of the State of Delaware on July 21,  1999,
pursuant to a limited  liability  company agreement with Public Service Electric
and Gas Company  (PSE&G),  as sole  member of  Transition  Funding.  PSE&G is an
operating  electric and gas utility and is a wholly owned  subsidiary  of Public
Service Enterprise Group Incorporated  (PSEG).  Transition Funding was organized
for the sole purpose of purchasing and owning  bondable  transition  property of
PSE&G (BTP), issuing transition bonds (Bonds),  pledging its interest in BTP and
other  collateral to a debt/security  trustee to  collateralize  the Bonds,  and
performing  activities that are necessary,  suitable or convenient to accomplish
these purposes.

     BTP  represents  the  irrevocable  right  of  PSE&G,  or its  successor  or
assignee,  to  collect  a  non-bypassable  transition  bond  charge  (TBC)  from
customers pursuant to a bondable stranded cost rate order (BPU Financing Order),
which was  issued on  September  17,  1999 by the State of New  Jersey  Board of
Public  Utilities (BPU) in accordance with the New Jersey Electric  Discount and
Energy  Competition  Act  enacted in  February  1999.  The BPU  Financing  Order
authorizes  the  TBC  to be  sufficient  to  recover  $2.525  billion  aggregate
principal amount of Bonds,  plus an amount  sufficient to provide for any credit
enhancement,  to fund any reserves and to pay interest,  redemption premiums, if
any, servicing fees and other expenses relating to the Bonds.

     Transition  Funding's  organizational  documents require it to operate in a
manner so that it should not be consolidated  in the bankruptcy  estate of PSE&G
in the event PSE&G becomes  subject to a bankruptcy  proceeding.  Both PSE&G and
Transition  Funding  will treat the transfer of BTP to  Transition  Funding as a
sale under  applicable  law.  The Bonds will be treated as debt  obligations  of
Transition Funding.  For financial reporting and Federal income tax and State of
New Jersey income and franchise tax purposes,  the transfer of BTP to Transition
Funding  will  be  treated  as a  financing  arrangement  and  not  as  a  sale.
Furthermore,   the  results  of  operations   of  Transition   Funding  will  be
consolidated with PSE&G for financial and income tax reporting purposes.

Note 2.  Significant Accounting Policies

Regulation

     The application of generally accepted  accounting  principles by Transition
Funding  differs  in  certain   respects  from   applications  by  non-regulated
businesses.  Transition Funding prepares its financial  statements in accordance
with the provisions of Statement of Financial Accounting Standards (SFAS) No. 71
"Accounting  for the  Effects  of Certain  Types of  Regulation"  (SFAS 71).  In
general,  SFAS 71 recognizes  that  accounting  for  rate-regulated  enterprises
should  reflect the economic  effects of  regulation.  As a result,  a regulated
utility is required to defer the  recognition  of costs (a regulatory  asset) or
the recognition of obligations (a regulatory  liability) if it is probable that,
through  the  rate-making  process,  there will be a  corresponding  increase or
decrease in future rates.  Accordingly,  Transition Funding has deferred certain
costs, which will be amortized over various future periods.

Use of Estimates

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions.  These  estimates  and  assumptions  affect the reported  amount of
revenues,  expenses,  assets,  and liabilities and disclosure of  contingencies.
Actual results could differ from these estimates.

<PAGE>
Deferred Issuance Costs

     The  costs  associated  with the  anticipated  issuance  of the  Bonds  are
capitalized  and upon  issuance  will be  amortized  over the life of the  Bonds
utilizing the effective interest method.

Income Taxes

     Transition   Funding  is  a  single-member   limited   liability   company.
Accordingly, all federal income tax effects and all material State franchise tax
effects of Transition Funding's activities accrue to PSE&G.

Note 3.  The Bonds

     The purpose of Transition  Funding is to issue Bonds  pursuant to authority
granted by the BPU in the BPU Financing  Order.  Transition  Funding  intends to
issue Bonds in series  (Series) from time to time,  the  maturities and interest
rates of which will depend upon market  conditions at the time of issuance.  The
proceeds will be used to fund the purchase of BTP from PSE&G.  Under  applicable
law,  the Bonds will not be an  obligation  of PSE&G or secured by the assets of
PSE&G.  Also under  applicable  law,  the Bonds will be recourse  to  Transition
Funding and will be collateralized on a pro rata basis by the BTP and the equity
and  assets of  Transition  Funding.  The  source of  repayment  will be the TBC
authorized  pursuant to the BPU Financing  Order,  which will be collected  from
PSE&G  customers by PSE&G,  as servicer.  TBC  collections  will be deposited at
least monthly by PSE&G with  Transition  Funding and used to pay the expenses of
Transition  Funding,  to pay debt  service  on the Bonds and to fund any  credit
enhancement  for the Bonds.  Transition  Funding  will also  pledge the  capital
contributed by PSE&G to secure the debt service  requirements of the Bonds.  The
debt service requirements will include an  overcollateralization  subaccount,  a
capital  subaccount  and a reserve  subaccount  which will be  available to bond
holders.  Any amounts  collateralizing  the Bonds will be returned to PSE&G upon
payment of the Bonds.

Note 4.  Significant Agreements and Related Party Transactions

     Under the servicing  agreement entered into by Transition Funding and PSE&G
concurrently with the issuance of the first Series of Bonds, PSE&G, as servicer,
will be required to manage and administer  the BTP of Transition  Funding and to
collect the TBC on behalf of Transition Funding.  Transition Funding will pay an
annual  servicing  fee to PSE&G equal to 0.05% of the  initial  balance of Bonds
issued. The servicing fee will also be recovered through the TBC.

     All debt issuance  costs will be paid by PSE&G and reimbursed by Transition
Funding upon issuance of the Bonds.

Note 5.  Accounting Matters

     Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative  Instruments and Hedging  Activities" (SFAS 133) is effective for all
fiscal years beginning  after June 15, 2000.  SFAS 133, as amended,  establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts,  and for hedging activities.
Under SFAS 133, certain contracts that were not formerly considered  derivatives
may now meet the definition of a derivative. Transition Funding adopted SFAS 133
effective January 1, 2001.  Transition Funding had no transition adjustment as a
result of adopting SFAS 133. Management does not expect the adoption of SFAS 133
to have a significant impact on the financial  position,  results of operations,
or cash flows of Transition Funding.

<PAGE>
Note 6.  Subsequent Events

     On January 31, 2001, Transition Funding issued $2.525 billion of transition
bonds in eight  classes with  maturities  ranging  from 1 year to 15 years.  The
significant  terms of the  transition  bonds  issued by  Transition  Funding  on
January 31, 2001 are as follows:

<TABLE>
<CAPTION>
                                                         Proceeds to
                    Initial                              Transition        Expected Final     Final Maturity
               Principal Balance    Interest Rate        Funding LLC        Payment Date           Date
               -----------------    -------------        -------------     --------------     --------------
<S>            <C>                      <C>              <C>                 <C>                 <C>
Class A-1      $105,249,914             5.46%            $104,881,454         6/15/02             6/15/04
Class A-2      $368,980,380             5.74%            $367,464,694         3/15/05             3/15/07
Class A-3      $182,621,909             5.98%            $181,746,628         6/15/06             6/15/08
Class A-4      $496,606,425         LIBOR + 0.30%        $494,123,393         6/15/09             6/15/11
Class A-5      $328,032,965             6.45%            $326,306,606         3/15/11             3/15/13
Class A-6      $453,559,632             6.61%            $450,969,960         6/15/13             6/15/15
Class A-7      $219,688,870             6.75%            $218,219,850         6/15/14             6/15/16
Class A-8      $370,259,905             6.89%            $367,732,325        12/15/15            12/15/17
</TABLE>

     Transition Funding has entered into an interest rate swap on its sole class
of floating rate transition  bonds. The interest rate swap effectively  converts
the existing floating rate debt into fixed rate borrowings.  The net proceeds of
the issuance were remitted to PSE&G as  consideration  for the property right in
the TBC.

     Transition  Funding  has  incurred  certain  additional  issuance  costs in
connection  with the  securitization  transaction,  including costs of a hedging
arrangement  as  permitted  by the  Finance  Order.  Costs in excess of the $125
million of estimated transaction costs provided for in the Finance Order will be
recovered on a subordinated basis by Transition Funding through the TBC. The TBC
rate became effective on February 7, 2001, in accordance with the Final Order.

<PAGE>
                          INDEPENDENT AUDITORS' REPORT

PSE&G Transition Funding LLC:

     We have audited the accompanying balance sheets of PSE&G Transition Funding
LLC (the "Company") as of December 31, 2000 and December 31, 1999. These balance
sheets are the responsibility of the Company's management. Our responsibility is
to express an opinion on these balance sheets based on our audits.

     We conducted our audits in accordance  with  auditing  standards  generally
accepted in the United States of America.  Those standards  require that we plan
and perform the audit to obtain  reasonable  assurance about whether the balance
sheet is free of material misstatement.  An audit includes examining,  on a test
basis,  evidence supporting the amounts and disclosures in the balance sheet. An
audit also includes  assessing the accounting  principles  used and  significant
estimates  made by management,  as well as evaluating the overall  balance sheet
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

     In our  opinion,  such  balance  sheets  present  fairly,  in all  material
respects,  the  financial  position of the  Company as of December  31, 2000 and
December 31, 1999, in conformity with accounting  principles  generally accepted
in the United States of America.

Deloitte & Touche LLP
April 13, 2001

<PAGE>
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

     None.

                                    PART III
                                    --------

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS

     Omitted  pursuant to conditions set forth in General  Instruction I of Form
10-K.

ITEM 11. EXECUTIVE COMPENSATION

     Omitted  pursuant to conditions set forth in General  Instruction I of Form
10-K.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     Omitted  pursuant to conditions set forth in General  Instruction I of Form
10-K.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Omitted  pursuant to conditions set forth in General  Instruction I of Form
10-K.

                                    PART IV
                                    -------

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(A)  The following documents are filed as a part of this report:

     a.   PSE&G  Transition  Funding  LLC  Balance  Sheets  for the years  ended
          December 31, 2000 and 1999 on page 5.

(B)  The  following  reports on Form 8-K were filed  during the last  quarter of
     2000 and the 2001 period covered by this report under the items indicated:

     Date of Report         Items Reported
     --------------         --------------
     January 25, 2001       Items 5 and 7
     February 7, 2001       Items 5 and 7


<PAGE>

                                   SIGNATURES
                                   ----------

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                            PSE&G Transition Funding LLC

                            By  ROBERT E. BUSCH
                                --------------------
                                Robert E. Busch
                                Manager, Chief Executive Officer
                                Chief Financial Officer and
                                Principal Accounting Officer

Date: April 23, 2001

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the dates indicated.

     Signature                Title                               Date
     ---------                -----                               ----

     ROBERT E. BUSCH          Manager, Chief Executive Officer,   April 23, 2001
     ----------------------   Chief Financial Officer and
     Robert E. Busch          Principal Accounting Officer



     MORTON A. PLAWNER        Manager, Vice President             April 23, 2001
     ----------------------   and Treasurer
     Morton A. Plawner




     R. EDWIN SELOVER         Manager                             April 23, 2001
     ----------------------
     R. Edwin Selover




     DWIGHT JENKINS           Manager                             April 23, 2001
     ----------------------
     Dwight Jenkins




     DEAN A. CHRISTIANSEN     Manager                             April 23, 2001
     ----------------------
     Dean A. Christiansen

<PAGE>

EXHIBIT INDEX

     Certain  Exhibits  previously filed with the Commission and the appropriate
securities  exchanges  are  indicated as set forth below.  Such Exhibits are not
being refiled,  but are included  because  inclusion is desirable for convenient
reference.

(a)  Filed by Transition Funding with Registration Statement No. 333-83635 under
     the Securities  Act of 1933,  effective  January 23, 2001,  relating to the
     issuance of $2,525,000,000 Transition Bonds.

(b)  Filed by Transition Funding with Form 8-K under the Securities Exchange Act
     of 1934, on February 7, 2001.

<TABLE>
<CAPTION>

--------------------------------------------
              Exhibit Number
--------------------------------------------
  This Filing        Previous Filing
--------------------------------------------
     <S>            <C>           <C>      <C>
      1.1           (b)           1.1      Underwriting Agreement dated as of January 25, 2001 among Public
                                           Service Electric and Gas Company, PSE&G Transition Funding LLC and
                                           Lehman Brothers, Inc., on behalf of itself and as the representative of
                                           the several underwriters named therein

      4.1           (a)           4.1      Limited Liability Company Agreement of PSE&G Transition Funding LLC

     4.1.1          (b)          4.1.1     Form of Amended and Restated Limited Liability Company Agreement of
                                           PSE&G Transition Funding LLC dated as of January 31, 2001

      4.2           (a)           4.2      Certificate of Formation of PSE&G Transition Funding LLC

     4.2.1          (b)          4.2.1     Form of Amended and
                                           Restated Certificate of Formation of
                                           PSE&G Transition Funding LLC dated as
                                           of January 25, 2001, which was filed
                                           with the Delaware Secretary of
                                           State's Office on January 26, 2001

      4.3           (a)           4.3      Form of Indenture

     4.3.1          (b)          4.3.1     Indenture dated as of January 31, 2001 between PSE&G Transition Funding
                                           LLC and The Bank of New York

     4.3.2          (b)          4.3.2     Series Supplement dated as of January 31, 2001 between PSE&G Transition
                                           Funding LLC and The Bank of New York

      4.4           (a)           4.4      Form of Transition Bonds

     10.1           (b)           10.1     Bondable Transition Property Sale Agreement dated as of January 31,
                                           2001 between Public Service Electric and Gas Company and PSE&G
                                           Transition Funding LLC

     10.2           (b)           10.2     Servicing Agreement dated as of January 31, 2001 between PSE&G
                                           Transition Funding LLC and Public Service Electric and Gas Company

     10.3           (a)           10.3     Petition of PSE&G to the State of New Jersey Board of Public Utilities,
                                           dated June 8, 1999

     10.4           (a)           10.4     Financing Order of the BPU issued September 17, 1999

      23                                   Independent Auditors' Consent

     25.1           (a)           25.1     Statement of Eligibility under the Trust Indenture Act of 1939, as
                                           amended, of The Bank of New York, as Trustee under the Indenture

     99.1           (a)           99.1     Final BPU restructuring order issued August 24, 1999

     99.2           (a)           99.2     Internal Revenue Service Private Letter Ruling pertaining to Transition
                                           Bonds
</TABLE>