PSEG has entered into employment agreements with each of Messrs. Cassidy, Dougherty and Koeppe dated as of October 17, 2000, covering the respective employment of each in the position listed in the Summary Compensation Table through October 16, 2005. The Agreements are essentially identical and provide that the base salary, target annual incentive bonus and long-term incentive bonus of each will be determined based on compensation practices of similar companies and that annual salary will not be reduced during the term of the Agreement, and awarded to each of Messrs. Cassidy, Dougherty and Koeppe 250,000 options on PSEG Common Stock, 50,000 of which vest on each October 17 from 2001 through 2005, and expire on October 17, 2010, provided the individual has remained continuously employed by PSEG through each such vesting date. The Agreement for Mr. Koeppe also provides for the grant of 25 years of pension credit for Mr. Koeppe’s prior service.

     Each of the Agreements further provides that if the individual is terminated without “Cause” or resigns for “Good Reason” (as those terms are defined in each Agreement) during the term of the Agreement, the respective entire restricted stock award and/or entire option award becomes vested, the individual will be paid a benefit of two times base salary and target bonus, and his welfare benefits will be continued for two years unless he is sooner employed. In the event such a termination occurs after a “Change in Control” (also as defined in the Agreement), the payment to the individual becomes three times the sum of salary and target bonus, continuation of welfare benefits for three years unless sooner reemployed, payment of the net present value of providing three years additional service under PSEG’s retirement plans, and a gross-up for excise taxes on any termination payments due under the Internal Revenue Code. Each of the Agreements provides that the individual is prohibited for one year (two years for Mr. Ferland) from competing with and for two years from recruiting employees from, PSEG or its subsidiaries or affiliates, after termination of employment. Violation of these provisions requires a forfeiture of the respective restricted stock and option grants and certain benefits.

Compensation Committee Interlocks and Insider Participation

     During 2002, each of the following individuals served as a member of the Organization and Compensation Committee: Raymond V. Gilmartin, Chairman, Ernest H. Drew, T. J. Dermot Dunphy (retired Director), Conrad K. Harper, William V. Hickey and Shirley Ann Jackson. During 2002, no member of the Organization and Compensation Committee was an officer or employee or a former officer or employee of any PSEG company. No officer of PSEG served on the compensation committee of any of the companies for which any of these individuals served as an officer.

Compensation of Directors and Certain Business Relationships

     During 2002, a director who was not an officer of PSEG or its subsidiaries and affiliates was paid an annual retainer of $30,000 and a fee of $1,500 for attendance at any Board or committee meeting, inspection trip, conference or other similar activity relating to PSEG or PSE&G. This amount was raised to $40,000 effective for 2003. Pursuant to the Compensation Plan for Outside Directors, a certain percentage, currently fifty percent, of the annual retainer is paid in PSEG Common Stock. No additional retainer is paid for service as a director of PSE&G. Each Committee Chair received an additional annual retainer of $3,000, increased for 2003 to $5,000, except for the Chair of the Audit Committee, who will receive $10,000. In addition, beginning in 2003, each member of the Audit Committee will receive an annual retainer of $5,000.

     PSEG also maintains a Stock Plan for Outside Directors pursuant to which directors who are not employees of PSEG or its subsidiaries receive shares of restricted stock for each year of service as a director. For 2002, this amount was 600 shares, increased to 800 shares for 2003. Such shares held by each non-employee director are included in the table above under the heading Security Ownership of Directors, Management and Certain Beneficial Owners.

     The restrictions on the stock granted under the Stock Plan for Outside Directors provide that the shares are subject to forfeiture if the director leaves service at any time prior to the Annual Meeting of Stockholders following his or her 70th birthday. This restriction would be deemed to have been satisfied if the director’s service were terminated after a “change in control” as defined in the Plan or if the director were to die in office. PSEG also has the ability to waive these restrictions for good cause shown. Restricted stock may not be sold or otherwise transferred prior to the lapse of the restrictions. Dividends on shares held subject to restrictions are paid directly to the director, and the director has the right to vote the shares.

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Compensation Pursuant to Pension Plans

     The table below illustrates annual retirement benefits for executive officers expressed in terms of single life annuities based on the average final compensation and service shown and retirement at age 65. A person’s annual retirement benefit is based upon a percentage that is equal to years of credited service plus 30, but not more than 75%, times average final compensation at the earlier of retirement, attainment of age 65 or death. These amounts are reduced by Social Security benefits and certain retirement benefits from other employers. Pensions in the form of joint and survivor annuities are also available.

Pension Plan Table

		Length of Service
Average Final Compensation		30 Years		35 Years		40 Years		45 Years
500,000		300,000		325,000		350,000		375,000
600,000		360,000		390,000		420,000		450,000
700,000		420,000		455,000		490,000		525,000
800,000		480,000		520,000		560,000		600,000
900,000		540,000		585,000		630,000		675,000
1,000,000		600,000		650,000		700,000		750,000
1,100,000		660,000		715,000		770,000		825,000
1,200,000		720,000		780,000		840,000		900,000
1,300,000		780,000		845,000		910,000		975,000
1,400,000		840,000		910,000		980,000		1,050,000
1,500,000		900,000		975,000		1,050,000		1,125,000

     Average final compensation, for purposes of retirement benefits of executive officers, is generally equivalent to the average of the aggregate of the salary and bonus amounts reported in the Summary Compensation Table above under “Annual Compensation” for the five years preceding retirement, not to exceed 150% of the average annual salary for such five year period. Messrs. Ferland, Cassidy, O’Flynn, Dougherty and Koeppe will have accrued approximately 48, 48, 44, 48 and 46 years of credited service, respectively, as of age 65.

ORGANIZATION AND COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION

     The compensation program for executive officers of PSEG and its subsidiaries is administered by the Organization and Compensation Committee of the PSEG Board of Directors. The Organization and Compensation Committee operates under a written charter adopted by the Board of Directors, a copy of which is posted on PSEG’s website. During 2002, the Committee consisted solely of independent directors. Policies and plans developed by the Committee are approved by the full Board of Directors. Administration of the plans is the responsibility of the Committee.

     The Committee’s philosophy on executive compensation is to base compensation on the value and level of performance of the executive and to link compensation to shareholder value. To achieve this result, the Committee has developed and administers several pay delivery systems designed to focus executive efforts on improving corporate performance. These systems include base salary, an annual incentive compensation plan and a long-term incentive compensation plan. Also included as compensation are a deferred compensation plan, employer contributions to a 401(k) plan and an employee stock purchase plan.

     Base salary levels are reviewed annually using compensation data compiled by outside compensation experts for similar positions and comparable companies. The utilities surveyed include some of, but are not limited to, those included in the Dow Jones Utilities Index. Most of the general industry companies surveyed are included in the S&P 500 Composite Stock Price Index. Each of these indices are shown in the Performance Graph below. For PSE&G positions, market data is reviewed for large electric and gas utilities, as well as for general industry. For Power, data for energy services and relevant general industry is utilized, while for Energy Holdings and Services positions, relevant general industry data is taken into consideration. Individual performance of the executive with respect to corporate performance criteria is determined and taken into account when setting salaries against the competitive market data. Such corporate performance criteria include attainment of business unit plans and financial targets, as well as individual measures for each executive officer related to such person’s area of responsibility. In addition, factors such as leadership ability, managerial skills and other personal aptitudes and attributes are considered. Base salaries for satisfactory performance are targeted at the median of the competitive market. Generally, for 2002, base salaries were increased from 2001 levels to reflect general market adjustments for comparable positions.

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     For fiscal year 2002, the base salary of E. James Ferland, Chairman of the Board, President and Chief Executive Officer, based on overall performance and consideration of market data, was set at a rate which was approximately the median of comparable size energy companies. Since the incentive compensation plans discussed below have been based in part upon a percentage of salary, these elements of Mr. Ferland’s compensation may be affected by increases in salary. In determining base salary for Mr. Ferland, individual performance in relation to corporate performance factors such as achievement of business plans, financial results, safety, human resources management, nuclear operations, effectiveness of transition to competitive environment and civic leadership are considered.

     The Restated and Amended Management Incentive Compensation Plan is designed to motivate and reward executives for both achievement of individual goals and overall company results and operates as an incentive compensation pool plan pursuant to which an award fund is established by the Committee each year. The maximum award fund in any year is 2.5% of PSEG’s net income. Mr. Ferland’s maximum award cannot exceed 10% of the award fund and the maximum award for other participants cannot exceed 90% of the award fund divided by the number of participants, other than Mr. Ferland, for that plan year. The Committee has the authority to reduce the award of any participant below the maximum award otherwise payable based upon criteria it deems appropriate. For plan year 2002, each individual executive officer whose award is not subject to the income tax deduction limit of Section 162(m) of the Internal Revenue Code, described below, had a target incentive award, expressed as a percentage of salary ranging from 30% to 60%, established by the Committee. Each individual target incentive award was multiplied by two components, one reflecting corporate goal results and one reflecting a combination of business factors and individual goal results. The corporate goal for 2002 was based upon a comparison of PSEG return on equity to a group of utilities which comprise the Dow Jones Utilities Index. The return on equity is measured as of September 30, rather than December 31, in order to permit award determinations to be made and paid closer in time to year-end.

     The corporate goal was computed by assigning an award factor of between 0 and 1.5 based upon the comparison of return on equity. The award is adjusted based upon PSEG’s return on equity in reference to the comparison group. A return of five percentage points above the median results in an award factor of 1.5. For 2002, the corporate goal factor was 0.63. After applying the corporate goal factor, the resulting amount is further multiplied by a combination of a business factor and an individual factor of between 0 and 1.5, based upon the executive’s accomplishment of specific objectives. The criteria utilized with respect to a significant percentage of such individual specific objectives were the attainment of certain corporate performance goals. Depending on the executive officer, for 2002 these corporate factors were financial and business performance, regulatory and public policy strategies, business strategy, safety, nuclear performance, management of corporate support services and cost savings.

     Annual awards are determined within 120 days of the end of the fiscal year. Awards for 2002 performance, including Mr. Ferland’s, were determined in January 2003. The Committee determined to reduce Mr. Ferland’s award below the maximum allowed to reflect certain specific factors, including: PSEG’s 2002 return on equity, PSEG’s operating activities, the performance of Mr. Ferland and his direct reports, the performance of individual business units, and safety and financial performance.

     The 1989 Long-Term Incentive Plan and the 2001 Long-Term Incentive Plan are designed to provide a direct linkage between the executive’s interests and increases in shareholder value by encouraging certain executives of PSEG and its subsidiaries to increase their ownership of PSEG Common Stock. They are also designed to motivate and reward executives for meeting corporate objectives that are intended to more closely align the executives’ interest with the long-term interests of PSEG’s shareholders.

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     Under the 2001 Long-Term Incentive Plan, only non-qualified stock options can be granted and individual grants cannot exceed 1,000,000 shares annually. No grants have been made under the 1989 Plan since 2001. In 2002, the 1989 Plan was amended to eliminate tandem option grants.

     Grant levels are determined by the Committee based upon several factors including the participant’s ability to contribute to the overall success of PSEG and its subsidiaries and competitive market data. The level of grants and the value of any performance units are reviewed annually by the Committee. The Committee does not consider the current level of options held by executive officers when determining option grants.

     In 2002, the total value of the grant of options to executive officers as a group was targeted at the median of the competitive market, but, depending upon individual factors for particular executives, in some cases was either above or below the median. In 2002, Mr. Ferland was granted 350,000 non-tandem options. The value of the grant of stock options to Mr. Ferland was below the median of the comparative market data.

     Mr. Ferland has been awarded 210,000 shares of restricted PSEG Common Stock under an Employment Agreement entered into in 1998 and amended in 2001, which shares vest in stages annually through 2007. The award was designed to align his interests with an increase in shareholder value and to incent him to remain with PSEG as CEO through March 31, 2007.

     Section 162(m) of the Internal Revenue Code generally denies a deduction for Federal income tax purposes for compensation in excess of $1 million for persons named in the proxy statement, except for compensation pursuant to stockholder-approved performance-based plans. In 2002, the Committee and PSEG determined to seek stockholder approval of the 2001 Long-Term Incentive Plan and the Restated and Amended Management Incentive Compensation Plan. Stockholder approval was received at the 2002 Annual Meeting. As a result, compensation under these plans is not now subject to the Section 162(m) limitation on deductions. In 2002, for purposes of Section 162(m), Messrs. Ferland and O’Flynn had compensation in excess of $1 million. The Committee and PSEG will continue to evaluate executive compensation in light of Section 162(m).

     Members of the Organization and Compensation Committee:

Raymond V. Gilmartin, Chairman Ernest H. Drew Conrad K. Harper

William V. Hickey Shirley Ann Jackson

February 18, 2003

AUDIT COMMITTEE REPORT

     The Audit Committee of the PSEG Board of Directors is composed solely of independent directors. It operates under a written charter adopted by the Board of Directors, a copy of which is attached as Appendix A to the PSEG Proxy Statement and posted on PSEG’s website. It is annually reviewed and assessed for adequacy by the Audit Committee.

     Management is responsible for PSEG’s financial statements and internal controls. The independent auditors of PSEG, Deloitte & Touche LLP, report directly to the Audit Committee and are responsible for performing an independent audit of PSEG’s annual consolidated financial statements in accordance with generally accepted auditing standards and for issuing a report thereon. The Committee’s overall responsibility is to assist the Board of Directors in overseeing the quality and integrity of the accounting, auditing and financial reporting practices.

     In performance of its responsibilities, the Committee has met and held discussions with management and the independent auditors. Management represented to the Committee that PSEG’s consolidated financial statements were prepared in accordance with generally accepted accounting principles, and the Committee has reviewed and discussed the consolidated audited financial statements with management and the independent auditors. The Committee discussed with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61 (Communication with Audit Committees), and other requirements including the following:

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•

methods used to account for significant transactions;

•

the effect of significant accounting policies in emerging areas;

•

the process used by management in formulating accounting estimates and the basis for the auditors’ conclusions regarding the reasonableness of these estimates;

•

any disagreements with management over the application of accounting principles, the basis for management’s accounting estimates, and the disclosures in the financial statements; and

•

critical accounting policies.

     The independent auditors also provided to the Committee the written disclosures required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees), and the Committee discussed with the independent auditors that firm’s independence with respect to PSEG and its management. The Committee has also reviewed the Sarbanes-Oxley Act of 2002 with respect to auditor independence and has defined the amount and scope of services that may be performed by Deloitte & Touche LLP consistent with maintaining the firm’s independence. The Audit Committee requires that all services of Deloitte & Touche LLP be pre-approved by the Audit Committee or the Audit Committee Chair. The Committee has considered whether the independent auditors provision of non-audit services to PSEG and the audit and non-audit fees paid to the independent auditors, are compatible with maintaining the independent auditors’ independence. On the basis of its review, the Committee determined that the independent auditors have the requisite independence.

     Based on the Committee’s discussions with management, the internal auditors and the independent auditors, the Committee’s review of the audited financial statements, the representations of management regarding the audited financial statements and the report of the independent auditors to the Committee, the Committee recommended to the Board of Directors that the audited financial statements be included in PSEG’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002, for filing with the Securities and Exchange Commission.

     Members of the Audit Committee:

Albert R. Gamper Jr., Chairman William V. Hickey Shirley Ann Jackson

Marilyn M. Pfaltz Richard J. Swift

February 18, 2003

FEES BILLED TO PSEG BY DELOITTE & TOUCHE LLP FOR 2002 AND 2001

     The appointment, termination, compensation and oversight of the work of the independent auditors, Deloitte & Touche LLP, is the direct responsibility of the Audit Committee of the PSEG Board of Directors, which reviews their independence, the services provided and their fees, as well as peer review reports of their performance. All fees paid to Deloitte & Touche LLP for all services, audit and non-audit, provided to PSEG and its subsidiaries are pre-approved by the Audit Committee or its Chair.

Audit Fees

     The aggregate fees billed to PSEG and its subsidiaries by Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu and their respective affiliates (collectively, Deloitte & Touche) for audit services rendered for the years ended December 31, 2002 and 2001 totaled $4,212,061 and $3,321,908, respectively. The fees were incurred for audits of the annual consolidated financial statements of PSEG and its subsidiaries, reviews of financial statements included in quarterly reports on Form 10-Q of PSEG and its subsidiaries and for services rendered in connection with certain financing transactions and fees for accounting consultations related to the application of new accounting standards and rules.

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Audit Related Fees

     The aggregate fees billed to PSEG and its subsidiaries by Deloitte & Touche for audit related services rendered for the years ended December 31, 2002 and 2001 totaled $296,100 and $233,780, respectively, primarily related to audits of PSEG’s employee benefit plans and performing certain attest services.

Tax Fees

     The aggregate fees billed to PSEG and its subsidiaries by Deloitte & Touche for tax compliance, tax planning and tax advice for the years ended December 31, 2002 and 2001 totaled $1,922,333 and $57,215, respectively.

All Other Fees

     The aggregate fees billed to PSEG and its subsidiaries by Deloitte & Touche for the year ended December 31, 2002 and 2001 for services other than the services described above totaled $267,061 and $1,621,998, respectively, primarily for regulatory assistance (2002) and acquisition due diligence (2001).

Deloitte Consulting

     Included in the above amounts are approximately $254,000 in fees billed by Deloitte Consulting for the year ended December 31, 2001. Deloitte & Touche intends to separate Deloitte Consulting from Deloitte Touche Tohmatsu during the first quarter of calendar 2003.

PERFORMANCE GRAPH

     The graph below shows a comparison of the five-year cumulative total return assuming $100 invested on December 31, 1997 in PSEG Common Stock, the S&P 500 Composite Stock Price Index, the Dow Jones Utilities Index and the S&P Electric Utilities Index.

		1997			1998			1999			2000			2001			2002
PSEG			100.00			133.61			123.03			181.85			165.67			133.62
S&P 500 Stock Index			100.00			128.52			155.53			141.36			124.63			97.16
Dow Jones Utilities			100.00			118.59			111.93			168.96			124.81			95.70
S&P Electric Utilities			100.00			116.18			97.29			149.45			124.50			105.73

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Proposal 2

RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS

     The Audit Committee of the Board of Directors has appointed Deloitte & Touche LLP of Parsippany, New Jersey, as independent auditors to make the annual audit of the books of account and supporting records of PSEG for 2003, subject to the ratification of the stockholders at the Annual Meeting of Stockholders.

     Deloitte & Touche LLP has made the annual audit of the books of account since 1973. Representatives of Deloitte & Touche LLP will be present at the Annual Meeting and will be afforded an opportunity to make a statement if they so desire and to respond to appropriate questions.

The Board of Directors recommends a vote FOR this proposal.

Proposal 3

STOCKHOLDER PROPOSAL

     This proposal was originally submitted by a stockholder in connection with the 2002 Proxy Statement and Annual Meeting and was resubmitted this year in accordance with applicable Securities and Exchange Commission rules. The proposal is printed exactly as it was resubmitted.

     Mr. John A. Dal Pan, 154 Mc Cosh Road, Upper Montclair, NJ 07043, owner of 6,317 shares of Common Stock, has informed PSEG that he intends to present for action at the Annual Meeting the following resolution:

     “Resolved: The shareholders urge our Board of Directors to take the necessary steps to nominate at least two candidates for each open board position, and that the names, biographical sketches, SEC-required declarations and photographs of such candidates shall appear in the company’s proxy materials (or other required disclosures) to the same extent that such information is required by law and is our company’s current practice with the single candidates it now proposes for each position. The attendance record of each incumbent Director should also be included.

     Supporting statement:

     Last year this proposal was put forth for the first time receiving support of more than 8% of the voted shares indicating that there is Stockholder support for this resolution.

     Although our company’s Board of Directors claims to have long recognized the importance of a sound procedure for the nomination of Directors and believes that the current process serves the stockholders well, we disagree. We believe that the Stockholders, the owners of the Company, can be better served if they are given a choice when voting for Directors.

     Our company should offer a rational choice when shareholders elect directors. Such a process could abate the problem of chair “choosing” his own board, that is, selecting those directors he expects will reflexively support his initiatives, and shedding those who may sometimes dissent. Such a process could create healthy and more rigorous shareholder evaluation about which specific nominees are best qualified.

     Our company currently nominates for election only one candidate for each board seat, thus leaving shareholders no practical choice in director elections. Shareholders who oppose a candidate have no easy way to do so unless they are willing to undertake the considerable expense of running an independent candidate for the board. The only other way to register dissent about a given candidate is to withhold support for that nominee, but that process rarely affects the outcome of directors’ elections. The current system thus provides no readily effective way for shareholders to oppose a candidate that has failed to attend board meetings; or serve on so many boards as to be unable to supervise our company management diligently; or who serves as a consultant to the company that could compromise independence; or poses other problems. As a result, while directors legally serve as the shareholder agent in overseeing management, the election of directors at the annual meeting is largely perfunctory. Even directors of near bankrupt companies enjoy re-election with 90%+ pluralities. The “real” selection comes through the nominating committee, a process too often influenced, if not controlled by the very management the board is expected to scrutinize critically.

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     Our company should offer a rational choice when shareholders elect directors. Would such a process lead to board discontinuity? Perhaps, but only with shareholder’s, the company owners, approval.

     Presumably an incumbent would be defeated only because shareholders considered the alternative a superior choice. Would such a procedure discourage some candidate? Surely our board should not be made of those intolerant of competition. Would such a procedure be “awkward” for management when it recruits candidates? Hopefully so. (Management could print a nominee’s name advanced by an independent shareholder to limit such embarrassment.) The point is to remove the final decision on who serves as a board director from the hands of management, and place it firmly in those of the shareholders.

     We urge you to vote FOR this proposal.

The Board of Directors recommends a vote AGAINST the adoption of this proposal for the following reasons:

     The Board of Directors has long recognized the importance of a sound procedure for the nomination of Directors and believes that the current process serves stockholders well.

     The Board’s current practice of nominating a single candidate for each Board position is consistent with the longstanding and widespread practice of major companies. The proponent does not cite any example of a corporation that has adopted the process he recommends. Last year, PSEG stockholders overwhelmingly rejected this proposal.

     At present, the Corporate Governance Committee of the Board, which consists solely of independent Directors, monitors the composition of the Board to assure that it contains a reasonable balance of professional interests, business experience, financial expertise and independence. This Committee also considers the qualifications of existing Board members and new nominees, before recommending such individuals for election or re-election to the Board. The Board then selects nominees based on the Committee’s recommendation.

     Following nomination, and in accordance with federal securities laws that require all companies to include in their proxy material certain information about each candidate, the names, business experience and other information about all nominees, as well as existing Board members, are provided in PSEG’s Proxy Statement to ensure stockholders are in a position to make an informed vote.

     The Board of Directors believes that this proposal would not improve the current nomination process. The Board is responsible for advising stockholders in making voting decisions. If the Board were required to nominate two candidates for each open position, as provided by the proposal, the Board would fail in its responsibility to stockholders to identify and recommend the best candidates for Board service. Further, many well-qualified persons would not be willing to participate in the type of contested election that the proposal would require.

     In summary, the procedure set forth by the proposal would not be an efficient or effective means of selecting the most qualified Directors for PSEG. The Corporate Governance Committee will, of course, continue to consider stockholders’ recommendations for nominees for election to the Board of Directors, as well as nominees identified by the Board members and management. The Board believes that the current process provides stockholders with the best candidates and is therefore in the best interests of PSEG.

The Board of Directors recommends a vote AGAINST this proposal.

DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS

     Stockholder proposals intended for inclusion in next year’s Proxy Statement should be sent to Edward J. Biggins, Jr., Secretary, Public Service Enterprise Group Incorporated, 80 Park Plaza, T4B, P.O. Box 1171, Newark, New Jersey 07101-1171, and must be received by November 10, 2003.

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DISCRETIONARY PROXY VOTING AUTHORITY

     If PSEG is not notified by January 24, 2004 of any proposal intended to be presented for consideration at the 2004 Annual Meeting of Stockholders, then the proxies named by PSEG with respect to that meeting shall have discretionary voting authority with respect to such proposal if presented at the meeting.

     If any matters not described in this Proxy Statement should come before the meeting, the persons named in the enclosed form of proxy or their substitutes will vote proxies given in said form in respect of any such matters in accordance with their best judgment. As of the date of this Proxy Statement, the Board of Directors and the management of PSEG did not know of any other matters which might be presented for stockholder action at the meeting.

SOLICITATION

     The cost of soliciting proxies in the form accompanying this Proxy Statement will be borne by PSEG. In addition to solicitation by mail, proxies may be solicited by directors, officers and employees of PSEG and its subsidiaries, in person or by telephone, electronically or by facsimile. PSEG has also retained Morrow & Co. to aid in the solicitation of proxies from brokers, bank nominees, other institutional holders and certain large individual holders. The anticipated cost of such services is approximately $10,000, plus reimbursement of expenses.

ANNUAL REPORT ON FORM 10-K

     PSEG will also provide without charge to each person solicited, on the written request of any such person, a copy of its Annual Report on Form 10-K for the year 2002, which has been filed with the Securities and Exchange Commission. Any such request should be made in writing to Morton A. Plawner, Treasurer, Public Service Enterprise Group Incorporated, 80 Park Plaza, T6B, P.O. Box 1171, Newark, New Jersey 07101-1171. Any such copy of PSEG’s Annual Report on Form 10-K so furnished will not include any exhibits thereto, but will be accompanied by a list briefly describing all such exhibits, and PSEG will furnish any such exhibit upon request and upon payment of the fee specified therefore. The Form 10-K is also available on PSEG’s website >www.pseg.com/corporategovernance.

DELIVERY OF PROXY STATEMENT AND ANNUAL REPORT
TO STOCKHOLDERS

     Stockholders can elect to view future Proxy Statements and Annual Reports electronically over the Internet instead of receiving paper copies in the mail. To do so, please logon to www.pseg.com/edelivery and follow the instructions. Each year, stockholders who choose this option will receive the Internet address where the materials can be found.

     Only one Annual Report to Stockholders and Proxy Statement is being delivered to multiple security holders sharing an address unless PSEG has received contrary instructions from one or more of the security holders. PSEG undertakes to deliver promptly upon written or oral request a separate copy of the Annual Report and Proxy Statement to a security holder at a shared address to which a single copy of the documents was delivered if the security holder notifies PSEG that the security holder wishes to receive a separate copy of the Annual Report and Proxy Statement by writing to PSEG Services Corporation, Stockholder Services, P.O. Box 1171, Newark, New Jersey 07101-1171 or by phoning 1-800-242-0813.

     Security holders sharing an address can request delivery of a single copy of Annual Reports or Proxy Statements if they are receiving multiple copies of Annual Reports or Proxy Statements by writing or phoning as noted above.

By order of the Board of Directors, EDWARD J. BIGGINS, JR. Secretary

March 3, 2003

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APPENDIX A

AUDIT COMMITTEE CHARTER

  Committee Role and Organization

     The Audit Committee of the Board of Directors of Public Service Enterprise Group Incorporated (the “Corporation”) assists the Board in fulfilling its responsibility for oversight of the integrity of the Corporation’s financial statements, and the quality and integrity of the accounting, auditing and financial reporting practices of the Corporation. The Audit Committee’s responsibilities also include assisting the Board in its oversight of the Corporation’s compliance with legal and regulatory requirements, the independence and qualifications of the independent auditors, and the performance of the independent auditors and the internal auditors. The Audit Committee shall perform such other duties as are directed by the Board or are required by law. The Committee shall have open and free access to all information and is empowered to investigate any matter involving the Corporation or its subsidiaries. The Committee may retain appropriate resources to assist it in discharging its responsibilities.

     The Audit Committee shall consist of three or more independent Directors who are generally knowledgeable in financial matters, including at least one member with accounting or financial management expertise. Each member shall be free of any relationship that, in the opinion of the Board, would interfere with his or her individual exercise of independent judgment, or that would render such member not to be independent under applicable law. For this purpose, a member of the Audit Committee may not, other than in his or her capacity as a Board or Committee member, accept any consulting, advisory or other compensatory fee from the Corporation, and may not be an affiliated person of the Corporation or of its subsidiaries. The Board will appoint and may remove members of the Audit Committee and will determine the Chair of the Committee, upon recommendation of the Corporate Governance Committee.

     The Committee will meet at least three times per year in discharge of its duties. The Committee shall maintain free and open communication (including private executive sessions) with the independent auditors, the internal auditors, the environmental health and safety auditors and management.

  Independent Auditors

     The Audit Committee, in its capacity as a committee of the Board of Directors, shall be directly responsible for the appointment, termination, compensation and oversight of the work of the independent auditors of the Corporation. The independent auditors shall report directly to the Audit Committee.

     The Audit Committee shall ensure that the independent auditors submits on at least an annual basis a formal written statement delineating all relationships between the auditors and the Corporation and certifying the auditors’ independence, in accordance with Independence Standards Board Standard No. 1 and applicable law. The Audit Committee shall discuss with the auditors its independence and such disclosed relationships that may impact on the objectivity or independence of the independent auditors. The Committee shall take such actions in its judgment as are necessary or appropriate to assure the independence of the auditors. The Audit Committee, or the Chair of the Committee, shall pre-approve the fees to be paid to the independent auditors for all services.

  Committee Duties

     In carrying out its responsibilities, the Committee will:

•

Review the adequacy of the Audit Committee Charter annually and submit Charter revisions to the Board for consideration, as required.

•

Review the annual audited and the quarterly financial statements, and management’s discussion and analysis of financial condition and results of operations, with the independent auditors, management and the internal auditors. This review will cover both the acceptability and the quality of the Corporation’s financial statements, including the matters required by Statement on Auditing Standards No. 61.

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•

Review with the independent auditors, management and the internal auditors the acceptability and application of policies and practices with respect to accounting, reporting and auditing, and the adequacy of internal controls.

•

Provide for pre-approval of the scope of all services to be provided by the independent auditors and the fees associated therewith.

•

Recommend to the Board of Directors the inclusion of the audited financial statements in the Corporation’s Form 10-K Annual Report to the Securities and Exchange Commission.

•

Issue an annual Audit Committee Report for inclusion in the Corporation’s Proxy Statement.

•

Resolve disagreements which may arise between management and the independent auditors regarding financial reporting.

•

Assure that the Corporation has adequate, independent procedures for:

o

the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls, or auditing matters; and

o

the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.

•

Provide oversight of the internal audit and environmental, health and safety audit functions of the Corporation, including review and discussion of reports at least annually by these functions summarizing audit findings and implementation by management of recommendations made by the auditors.

•

Review the status of pending material litigation, and legal and business conduct compliance.

•

Report Audit Committee activities to the Board.

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     The New Jersey Performing Arts Center (NJPAC) is located on the riverfront at McCarter Highway and Center Street, near the Gateway Center and Penn Station. A total of 1,600 parking spaces are available in three surface lots and the underground Military Park garage.

FROM THE SOUTH Via the New Jersey Turnpike: (Northbound) Take the New Jersey Turnpike North to Exit 15W (Newark/The Oranges) for Route 280 westbound. After the toll booth, follow Route 280 West to Exit 15A (Route 21 South–Downtown). Follow signs to Route 21 (aka McCarter Highway) and turn south onto Route 21. Follow Route 21 to Center Street, make a right on Center Street and turn right at Mulberry Street for adjacent parking or continue two blocks to the Military Park garage, located on the left.		FROM THE NORTH Via the New Jersey Turnpike: (Southbound) Take the New Jersey Turnpike South to Exit 15W or 15E (Newark/ The Oranges). After the toll booth, follow Route 280 West to Exit 15A (Route 21 South–Downtown). Follow signs to Route 21 (aka McCarter Highway) and turn south onto Route 21. Follow Route 21 to Center Street, make a right on Center Street and turn right at Mulberry Street for adjacent parking or continue two blocks to the Military Park garage, located on the left.		FROM THE WEST Via Route 280: Take Route 280 East to Exit 15 (Route 21 South–Downtown). At the traffic light at the bottom of the ramp, make a right onto Route 21 South (aka McCarter Highway). Continue on Route 21 South to Center Street, make a right on Center Street and turn right at Mulberry Street for adjacent parking or continue two blocks to the Military Park garage, located on the left.		FROM NEW YORK Via the New Jersey Turnpike: Leave the city through the Lincoln Tunnel and continue west on Route 495, staying left for the entrance to the New Jersey Turnpike. Take the turnpike south to Exit 15W (Newark/The Oranges). After the toll booth, follow Route 280 West to Exit 15A (Route 21 South–Downtown). Follow signs to Route 21 (aka McCarter Highway) and make a right onto Route 21 South. Follow Route 21 to Center Street, make a right on Center Street and turn right at Mulberry Street for adjacent parking or continue two blocks to the Military Park garage, located on the left.
Via the Garden State Parkway: (Northbound) Follow the Garden State Parkway North to Exit 142 (Route 78). Take Route 78 East. Stay right and follow Route 1 and 9 north to Route 21 (aka McCarter Highway). Travel across the viaduct into downtown Newark. Stay in the left-turn lanes and turn left at the second light. Continue one block and turn right onto Broad Street. Follow Broad Street 18 blocks to Park Place. Bear right at Park Place and enter the Military Park garage to the left or turn right onto Center Street and left at Mulberry Street for adjacent parking.		Via the Garden State Parkway: (Southbound) Take the Garden State Parkway South to Exit 145. Follow signs to Route 280 eastbound. Take Route 280 East to Exit 15 (Route 21 South–Downtown). At the traffic light at the bottom of the ramp, make a right onto Route 21 South (aka McCarter Highway). Continue on Route 21 South to Center Street, make a right on Center Street and turn right at Mulberry Street for adjacent parking or continue two blocks to the Military Park garage, located on the left.		Via Route 78: Take Route 78 East until it splits near Newark Airport. Stay right and follow Route 1 and 9 to Route 21 (aka McCarter Highway). Travel across the viaduct into downtown Newark. Stay in the left-turn lanes and turn left at the second light. Continue one block and turn right onto Broad Street. Follow Broad Street 18 blocks to Park Place. Bear right at Park Place and enter the Military Park garage to the left or turn right onto Center Street and left at Mulberry Street for adjacent parking.		Via Mass Transit: Board the train at New York’s Penn Station and travel to Penn Station, Newark. Take the new shuttle bus, dubbed “The Loop” to the NJPAC. To walk, exit the station via Raymond Boulevard and continue two blocks west to Mulberry Street. Turn right on Mulberry and walk two blocks north to the NJPAC.

Directions for reaching Newark, New Jersey, by bus or train may be obtained by calling New Jersey Transit at 1-800-772-2222 from Northern New Jersey and Mercer County, 1-800-582-5946 from Southern New Jersey and 1-973-762-5100 from outside of the State.

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Public Service Enterprise Group Incorporated
80 Park Plaza, Newark, New Jersey 07101-1171

Arrangements have been made to provide free parking within close proximity to the New Jersey Performing Arts Center at locations designated (P) on the map above.

Please bring your parking ticket with you to the meeting so that it can be validated by PSEG. Reasonable parking expenses incurred at locations other than those shown above will be reimbursed. Detailed directions appear on the immediately preceding page.

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PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
80 PARK PLAZA, P.O. BOX 1171
NEWARK, NEW JERSEY 07101-1171

VOTE BY INTERNET – www. proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time on April 14, 2003. Have your proxy card in hand when you access the web site. You will be prompted to enter your 12-digit Control Number which is located below to obtain your records and to create an electronic voting instruction form.

VOTE BY PHONE – 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time on April 14, 2003. Have your proxy card in hand when you call. You will be prompted to enter your 12-digit Control Number which is located below and then follow the simple instructions the Vote Voice provides you.

VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we’ve provided or return to Public Service Enterprise Group Incorporated, c/o ADP, 51 Mercedes Way, Edgewood, NY 11717.

 

 

 

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:		PSEGR1		KEEP THIS PORTION FOR YOUR RECORDS
				DETACH AND RETURN THIS PORTION ONLY

THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

THE BOARD OF DIRECTORS RECOMMENDS
A VOTE “FOR” PROPOSALS 1 AND 2

1.		ELECTION OF DIRECTORS
				For		Withhold		For All		To withhold authority to vote, mark "For All Except"
		Nominees for Class I term expiring in 2006 are:		All		All		Except		and write the nominee’s number on the line below.
		01) Caroline Dorsa
		02) Ernest H. Drew		|_|		|_|		|_|
		03) E. James Ferland
		Nominee for Class III term expiring in 2005 is:
		04) Thomas A. Renyi

Vote On Proposals				For		Against		Abstain
2.		Ratification of the appointment of Deloitte & Touche LLP as independent auditors for the year 2003.		|_|		|_|		|_|

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSAL 3.				For		Against		Abstain
3.		Stockholder proposal relating to the nomination of at least two candidates for each open Board position.		|_|		|_|		|_|

 

If you wish to include comments and/or address changes, please mark this box and write them on the back where indicated.

|_|

Please indicate if you plan to attend the Annual Meeting by marking the appropriate box.

|_| Yes

|_| No

Signature [PLEASE SIGN WITHIN BOX]	Date		Signature (Joint Owners)	Date

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ADMISSION TICKET

Public Service Enterprise Group Incorporated

2003 Annual Meeting of Stockholders

April 15, 2003 at 2:00 p.m. at the

New Jersey Performing Arts Center (NJPAC) - One Center Street, Newark, NJ 07102

(Registration Begins at 12:30 p.m.)

Please refer to the 2003 Proxy
Statement for maps and directions to the NJPAC.

For wheelchair and hearing impaired seating, please see a host/hostess for assistance.

You should present this admission ticket in order to gain admittance to the meeting. This ticket admits only the stockholder(s) listed on the reverse side and is not transferable. If your shares are held in the name of a broker, trust, bank, or other nominee, you should bring with you a proxy or letter from the broker, trustee, bank or nominee confirming your beneficial ownership of the shares. Each stockholder may be asked to present valid picture identification, such as a driver’s license. Cameras, recording devices and other electronic devices will not be permitted at the meeting.

THANK YOU FOR VOTING.

PROXY FROM				Public Service Enterprise Group Incorporated 80 Park Plaza, P.O. Box 1171 Newark, N.J. 07101-1171		PROXY FROM

Tear Hear				Tear Hear

PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
April 15, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF PSEG

The undersigned hereby appoints E. James Ferland, Ernest H. Drew and Richard J. Swift, and each or any of them, proxies of the undersigned, each with full power of substitution, to vote in their discretion (subject to any directions indicated on the reverse side of this proxy) at the Annual Meeting of Stockholders of Public Service Enterprise Group Incorporated (PSEG) to be held on April 15, 2003 and at all adjournments thereof, upon all matters which may come before the meeting or any adjournment, including the proposals set forth in the Notice of Meeting and Proxy Statement, receipt of which is hereby acknowledged. Said proxies are instructed to vote as set forth on the reverse side hereof with respect to said proposals.

Shares represented by this proxy will be voted in accordance with recommendations of the Board of Directors of PSEG as stated on the reverse side, unless otherwise indicated on the reverse, in which case they will be voted as marked. Information pertaining to each proposal is included in the Proxy Statement under proposals corresponding to the item numbers set forth on the reverse side.

Please mark your proxy on the reverse side, sign it and date it, and return it promptly in the envelope provided.

	Address Changes/Comments:
	(If you noted Address Changes/Comments above, please mark the corresponding box on the reverse side.)

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