KEY EXECUTIVE SEVERANCE PLAN OF PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

EXHIBIT 10.2

KEY EXECUTIVE SEVERANCE PLAN OF
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

Amended effective September 22, 2008

TABLE OF CONTENTS

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ARTICLE I

PURPOSE OF THE PLAN

               1.1 Purpose This Key Executive Severance Plan was established by the Company to provide severance benefits to certain key executive-level employees of the Company and its affiliates whose employment is terminated under the circumstances described herein.

               The American Jobs Creation Act of 2004 (the “AJCA”), which became law on October 22, 2004, added new section 409A to the Code and imposes new restrictions on deferred compensation, including certain severance arrangements. It further provides that payments upon a separation from service will meet the requirements of Code Section 409A only to the extent provided by guidance issued by the Department of Treasury where such payments are made due to a change in the ownership or effective control of the Company. The AJCA and any Treasury guidance issued to implement the AJCA may result in additional restrictions on a Participant’s rights relating to compensation considered to be deferred under this Plan. This Plan automatically incorporates all applicable restrictions of the AJCA and such regulations, and the Company will amend the Plan from time to time to the extent necessary to comply with those requirements. The timing under which a Participant will have a right to receive any payment under this Plan will be deemed to be automatically modified, and a Participant’s rights under the Plan limited to conform to any requirements under the AJCA and such regulations.

ARTICLE II

DEFINITIONS

               2.1 “Accrued Obligation” shall have the meaning set forth in Section 4.1(i)(A) or Section 5.1(i)(A), as applicable.

               2.2 “ Affiliate ” means any corporation, trade or business if it or the Company are members of a controlled group of corporations, are under common control or are members of an affiliated service group, within the meanings of Sections 414(b), 414(c) and 414(m), respectively, of the Code. The term “Affiliate” shall also include any other entity required to be aggregated with the Company pursuant to regulations under Section 414(o) of the Code.

               2.3 “ Annual Base Salary ” means the annual rate of base salary payable to a Participant for services performed for an Employer, as in effect immediately prior to the Participant’s Date of Termination.

               2.4 “ Board ” means the board of directors of the Company.

               2.5 “ Cause ” means (a) the willful and continued failure by a Participant to substantially perform his employment duties, (b) the willful engaging by the Participant in gross misconduct that is materially and demonstrably injurious to the Employer, (c) the willful violation of the Company’s Standards of Integrity or other applicable corporate code of conduct, or (d) the conviction of the Participant of a felony. No act or failure to act on the part of the Participant shall be considered “willful” unless it is done, or omitted to be done, by the Participant in bad faith or without reasonable belief that the Participant’s action or omission was

in the best interests of the Employer. Any act or failure to act that is based upon authority given pursuant to a resolution duly adopted by the Board, or the advice of counsel for the Employer, shall be conclusively presumed to be done, or omitted to be done, by the Participant in good faith and in the best interests of the Employer.

               Notwithstanding the forgoing, for purposes of the Plan, the termination of a Participant’s employment with an Employer shall not be deemed to be for Cause unless such termination is effected in accordance with the following procedures. The Employer shall give the Participant written notice (“Notice of Termination for Cause”) of its intention to terminate the Participant’s employment for Cause, setting forth in reasonable detail the specific conduct of the Participant that it considers to constitute Cause. Such notice shall be given no later than 60 days after the act or failure (or the last in a series of acts or failures) that the Employer alleges to constitute Cause. The Participant shall have 30 days after receiving the Notice of Termination for Cause in which to cure such act or failure, to the extent such cure is possible. In the case of a termination under clause (a), (b) or (c) above, if the Participant fails to cure such act or failure to the reasonable satisfaction of the Employer, the Employer shall give the Participant a second written notice stating that in the good faith opinion of the Employer, the Participant is guilty of the conduct described in the Notice of Termination for Cause and that such conduct constitutes Cause under the Plan.

               2.6 “ Change in Control ” means the occurrence of any of the following events:

          (a) any “person” (within the meaning of Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is or becomes the beneficial owner within the meaning of Rule 13d-3 under the Exchange Act (a “Beneficial Owner”), directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such person any securities acquired directly from the Company or its Affiliates) representing 25% or more of the combined voting power of the Company’s then outstanding securities, excluding any person who becomes such a Beneficial Owner in connection with a transaction described in clause (i) of paragraph (c) below; or

          (b) the following individuals cease for any reason to constitute a majority of the number of directors of the Company then serving: individuals who, on the Effective Date, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s stockholders was approved or recommended by a vote of at least two-thirds of the directors then still in office who either were directors on the Effective Date or whose appointment, election or nomination for election was previously so approved or recommended; or

          (c) there is consummated a merger or consolidation of the Company or any direct or indirect wholly-owned subsidiary of the Company with any other corporation, other than (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of

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the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or of its Affiliates, at least 75% of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company’s then outstanding securities; or

          (d) the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 75% of the combined voting power of the voting securities of which are owned by stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale.

          Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the common stock of the Company immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions.

               2.7 “ Code ” means the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

               2.8 “ Committee ” means the Organization and Compensation Committee of the Board or any successor of such Committee.

               2.9 “ Company ” means Public Service Enterprise Group Incorporated and any successors thereto.

               2.10 “ Confidential Information ” means all trade secrets, proprietary and confidential business information belonging to, used by, or in the possession of the Company or any of its Affiliates, including but not limited to information, knowledge or data related to business strategies, plans and financial information, mergers, acquisitions or consolidations, purchase or sale of property, leasing, pricing, sales programs or tactics, actual or past sellers, purchasers, lessees, lessors or customers, those with whom the Company or its Affiliates has begun negotiations for new business, costs, employee compensation, marketing and development plans, inventions and technology, whether such confidential information, knowledge or data is oral, written or electronically recorded or stored, except information in the public domain, information known by the Participant prior to employment with an Employer, and information received by the Participant from sources other than the Company or its Affiliates, without obligation of confidentiality.

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               2.11 “ Date of Termination ” means the date of a Participant’s death, Disability Effective Date, or the date on which the termination of the Participant’s employment by an Employer for Cause or without Cause or by the Participant for Good Reason or without Good Reason, including Retirement, is effective, as the case may be.

               2.12 “ Disability ” means that the Participant (a) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (b) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident or health plan covering employees of an Employer.

               2.13 “ Disability Effective Date ” means the 30th day after the Participant’s receipt of written notice of the Employer’s intention to terminate the Participant’s employment on account of Disability, provided that, within the 30 days after the Participant’s receipt of such notice, the Participant shall not have returned to full-time performance of his employment duties.

               2.14 “ Eligible Employee ” means an individual who is designated as such in accordance with Section 3.1.

               2.15 “ Effective Date ” means the effective date of the Plan, December 20, 2004.

               2.16 “ Employer ” means the Company and each Affiliate, and any successors thereto.

               2.17 “ Good Reason ” means,

          (b) any adverse change in the Participant’s title, authority, duties, or responsibilities or the assignment to the Participant of any duties or responsibilities inconsistent in any respect with those customarily associated with the position of the Participant immediately prior to the Change in Control;

          (c) the failure of any successor to the Company to assume this Plan in accordance with Section 11.5(b);

          (d) where the only comparable position offered to the Participant within the Employer following a change in control would not otherwise meet the requirements of subsections (a) and (b) of this section 2.17, but require the Participant to increase his or her one-way commuting distance from his or her principal residence by more than 50 miles; or

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          (e) any other material breach of the terms of the Plan by the Company that either is not taken in good faith or, even if taken in good faith, is not remedied by the Company promptly after receipt of notice thereof from the Participant.

          Notwithstanding the forgoing, for purposes of the Plan, the termination of a Participant’s employment with an Employer shall not be deemed to be for Good Reason unless such termination is effected in accordance with the following procedures. The Participant shall give his Employer a written notice (“Notice of Termination for Good Reason”) of the termination, setting forth in reasonable detail the specific acts or omissions of the Employer that constitute Good Reason and the specific provision(s) of the Plan on which the Participant relies. Unless the Committee determines otherwise, a Notice of Termination for Good Reason by the Participant must be made within 60 days after the Participant first has actual knowledge of the act or omission (or the last in a series of acts or omissions) that the Participant alleges to constitute Good Reason, and the Employer shall have 30 days from the receipt of such Notice of Termination for Good Reason to cure the conduct cited therein. A termination of employment by the Participant for Good Reason shall be effective on the final day of such 30-day cure period unless prior to such time the Employer has cured the specific conduct asserted by the Participant to constitute Good Reason to the reasonable satisfaction of the Participant.

          For purposes of the Plan, a Participant’s determination that an act or failure to act constitutes Good Reason shall be presumed to be valid unless such determination is decided to be unreasonable by the Committee or its delegate pursuant to Article IX.

               2.18 “ Other Benefits ” shall have the meaning set forth in Section 5.1, as applicable.

               2.19 “ Participant ” means an Eligible Employee who has satisfied the conditions for participation in the Plan, as set out in Section 3.2, and is listed on either Schedule A or Schedule B hereto, as the same may be amended from time to time.

               2.20 “ Plan ” means this Key Executive Severance Plan of Public Service Enterprise Group Incorporated, as set forth herein and as may be amended, modified or supplemented from time to time.

               2.21 “ Prior Equity Awards ” shall have the meaning set forth in Section 5.1(ii).

               2.22 “Retirement” means retirement under the terms of the Retirement Plan, as defined in Section 5.1(vi)(A).

               2.23 “ Schedule A Participant ” shall mean a Participant listed on Schedule A hereto.

               2.24 “ Schedule B Participant ” shall mean a Participant listed on Schedule B hereto.

               2.25 “ Target Bonus ” means the Participant’s target annual bonus, if any, under the applicable annual incentive compensation plan of the Company for the fiscal year in which the Date of Termination occurs.

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          2.26 “ Target Long-Term Incentive ” means the Participant’s target long-term incentive award, if any, under the applicable long-term incentive compensation plan of the Company.

ARTICLE III

ELIGIBILITY AND PARTICIPATION

          3.1 Eligible Employees . eligibility to participate in the Plan shall be limited to certain key executives of an Employer who (a) are not parties to individual employment or change in control agreements that provide for severance benefits, and (b) are designated, by duly adopted resolution of the Committee, as Eligible Employees.

          3.2 Participation . As a condition to becoming a Participant and being entitled to the benefits and protections provided under the Plan, each Eligible Employee must execute and deliver to the Company, within 30 days after the later of the Effective Date and the date such individual is designated by the Committee as an Eligible Employee, a written agreement in the form attached hereto as Exhibit I (or in such other form as may be satisfactory to the Company) to be bound by the restrictive covenants set forth in Sections 7.1, 7.2 and 7.3. Schedules A and B hereto list the Eligible Employees who have satisfied the conditions for Plan participation and the date as of which each such Eligible Employee became a Participant. The Committee shall cause Schedules A and B to be updated from time to time to reflect the Participants who are currently participating in the Plan.

          3.3 Release of Claims . Notwithstanding anything in the Plan to the contrary, payment of any benefits under the Plan is expressly contingent upon the Participant’s execution and delivery to the Company, within 45 days after the Participant’s Date of Termination, of a written agreement, in the form attached hereto as Exhibit II (or in such other form as may be satisfactory to the Company) wherein the Participant releases and discharges the Company and each of its Affiliates of any and all claims against the Company and its Affiliates related in any way to the Participant’s employment with an Employer and the termination of such employment.

ARTICLE IV

SEVERANCE BENEFITS IN GENERAL

          4.1 Termination by Employer Other than for Cause. Subject to Section 3.3 and Article VI, if an Employer shall terminate a Participant’s employment other than for Cause, death or Disability:

          (a) the Company shall pay to the Participant, in a lump sum in cash, the aggregate of the amounts set forth in clauses (i) and (ii) below:

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          (b) Long-Term Incentive Awards Any stock awards, stock options, stock appreciation rights or other equity-based awards that were outstanding immediately prior to the Date of Termination (“Prior Equity Awards”) shall vest and/or become exercisable in accordance with the underlying plan for such Prior Equity Award;

          (c) Annual Incentive Awards . As provided in subparagraph (a)(i)(2), Participant shall receive a prorated annual incentive award pursuant to the performance incentive program, if applicable, for the calendar year in which the Participant’s Termination of Employment occurs. The award shall be calculated based solely on 100 percent of the target incentive award and prorated based on the number of days of employment in the calendar year in which the participant’s Termination of Employment occurs through the employee’s Termination Date. Annual incentive awards with respect to the calendar year in which a Participant’s Termination Date occurs will be paid at the same time as awards for such calendar year are paid to active employees of the Employer.

          (d) Outplacement Services . Outplacement services approved by the Committee, which may include individual or group counseling and administrative assistance or workshops, shall be available beginning on the participant’s Termination Date or such earlier date designated by the participant’s business unit leadership. Outplacement services shall continue to be available for the period up to 12 months.

          (e) Educational Assistance . The Employer shall reimburse 90 percent of the costs (up to a total of $3,000) of tuition, required books and mandatory fees incurred for classes approved by the Committee that are successfully completed within two years after a Participant’s Termination Date. “Successful completion” shall mean the attainment of a final course grade of “C” or better. Reimbursement will be made only upon the submission of bills or receipts in such form as the Committee may require.

          (f) Health Care Benefits .

           Retiree Health Care Coverage . A Participant who has not otherwise satisfied the eligibility criteria for participation prior to his or her Termination Date, shall be entitled to

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elect retiree coverage under the Employer’s applicable retiree group health care plans as though he or she otherwise satisfied such plans’ eligibility requirements if:

           COBRA Continuation Coverage . Each Participant who is not eligible for, or does not elect, the retiree health care coverage described in this subsection (f) shall be entitled, pursuant to any continuation coverage rights under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), to continue individual and dependent coverage under the Company’s group health care plans following the Participant’s Termination Date. If continuation coverage is elected, the Employer shall pay the same portion of the cost of medical coverage that it paid immediately prior to the Participant’s Termination Date for active employees during the one-year period following the participant’s termination date that the Participant is receiving severance pay under Section 4.1, and the Participant shall pay the balance. The Participant shall be charged the full expense of medical coverage (102 percent of the cost of coverage) during the remainder of the statutory coverage period, if any, and the full expense of dental and (if applicable) vision and hearing coverage (102 percent of the cost of coverage) during the entire statutory coverage period.

          (g) Life Insurance . A Participant who is not eligible for coverage under the Employer’s retiree life insurance plan shall be entitled, for the one-year period following the Participant’s termination date to life insurance coverage at the Employer’s expense in an amount equal to the group term life insurance coverage in effect for such Participant under the Employer’s group term life insurance plan for active employees as of his or her Termination Date.

          (h) Other Benefits . A Participant shall not be entitled to any severance, separation or early retirement incentive pay or benefits other than as provided hereunder or under any qualified or nonqualified retirement plan or deferred compensation arrangement maintained by the Employer. Except as provided in the foregoing sentence, a Participant’s rights under any other employee benefit plans maintained by the Company or an Affiliate shall be determined in accordance with the provisions of such plans, including the Company’s right to amend or terminate such plans at any time. The amounts and benefits payable to the Participant pursuant to sub paragraphs (a) (iii), (b) (c), (d), (e), (f), and (g) shall be hereinafter referred to as the “Other Benefits”).

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ARTICLE V

SEVERANCE BENEFITS AFTER A CHANGE IN CONTROL

          5.1 Termination By Employer Other Than For Cause or By Participant For Good Reason (other than Good Reason as described in Subsection 2.17(d)) Within Two Years After a Change in Control . Subject to Section 3.3 and Article VI, if, within two years following the occurrence of a Change in Control, either (a) an Employer shall terminate a Participant’s employment other than for Cause, death or Disability or (b) a Participant shall voluntarily terminate his employment for Good Reason pursuant to Subsections 2.17 (a), (b), (c) or (e):

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