Exhibit 99.2

                          NOTICE OF GUARANTEED DELIVERY

                            PSEG ENERGY HOLDINGS INC.

 OFFER TO EXCHANGE ITS 8.625% SENIOR NOTES DUE 2008, WHICH HAVE BEEN REGISTERED
       UNDER THE SECURITIES ACT OF 1933 FOR ANY AND ALL OUTSTANDING 8.625%
            SENIOR NOTES DUE 2008, WHICH HAVE NOT BEEN SO REGISTERED.

              PURSUANT TO THE PROSPECTUS DATED ______________, 2001

As set forth in the Exchange Offer (as described in the Prospectus (as defined
below)), this form or one substantially equivalent hereto must be used to accept
the Exchange Offer if certificates for unregistered 8.625% Senior Notes due 2008
(the Original Notes), of PSEG Energy Holdings Inc. (Energy Holdings), are not
immediately available or time will not permit a holder's Original Notes or other
required documents to reach the Exchange Agent on or prior to the Expiration
Date, or the procedure for book-entry transfer cannot be completed on a timely
basis. This form may be delivered by facsimile transmission, by registered or
certified mail, by hand, or by overnight delivery service to the Exchange Agent.
See The Exchange Offer -- Procedures for Tendering Original Notes in the
Prospectus.

THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., EASTERN TIME,
ON _________________, 2001 (THE EXPIRATION DATE), UNLESS THE EXCHANGE OFFER IS
EXTENDED BY ENERGY HOLDINGS.

                  THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:

                            FIRST UNION NATIONAL BANK

   Facsimile Transmissions:
By Hand Or Overnight Delivery:    (Eligible     By Registered Or Certified Mail:
   First Union National Bank     Institutions    By Hand Or Overnight Delivery:
     First Union Customer           Only)           First Union National Bank
      Information Center         704-590-7628         First Union Customer
  1525 West W.T. Harris Blvd.                          Information Center
  Corporate Trust Department                       1525 West W.T. Harris Blvd.
    Charlotte, N.C.* 28262                         Corporate Trust Department
   Attention: Michael Klotz                          Charlotte, N.C.* 28262
                                                    Attention: Michael Klotz

                             To Confirm by Telephone
                            or for Information Call:
                                   Marsha Rice
                                  704-590-7413

(Originals of all documents sent by facsimile should be sent promptly by
registered or certified mail, by hand, or by overnight delivery service.)

DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.


Ladies and Gentlemen:

The  undersigned  hereby  tenders to PSEG  Energy  Holdings  Inc.,  a New Jersey
corporation  (Energy Holdings),  in accordance with Energy Holdings' offer, upon
the terms and  subject  to the  conditions  set  forth in the  prospectus  dated
_______________,  2001  (the  Prospectus),  and in the  accompanying  Letter  of
Transmittal,  receipt  of which is  hereby  acknowledged,  $____________  in the
aggregate principal amount of Original Notes pursuant to the guaranteed delivery
procedures described in the Prospectus.

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Name(s) of Registered Holder(s): _______________________________________________
                                             (Please Type or Print)

Address: _______________________________________________________________________

Area Code and Telephone Number: ________________________________________________

Certificate Number(s) for Original Notes (if available): _______________________

Total Principal Amount Tendered and
Represented by Certificate(s): $ _______________________________________________

Signature of Registered Holder(s): _____________________________________________

Date: ____________________________________

|_| The Depository Trust Company

        (check if Original Notes will be tendered by book-entry transfer)

Account Number ___________________________

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                      THE GUARANTEE BELOW MUST BE COMPLETED

                                    GUARANTEE
                    (Not to be used for signature guarantee)

The  undersigned,  being a  member  firm  of a  registered  national  securities
exchange, a member of the National Association of Securities Dealers, Inc., or a
commercial  bank or trust company having an office in the United States,  hereby
guarantees (a) that the above-named person(s) own(s) the Original Notes tendered
hereby  within the  meaning  of Rule 14e-4  (Rule  14e-4)  under the  Securities
Exchange Act of 1934,  as amended,  (b) that the tender of such  Original  Notes
complies  with  Rule  14e-4,  and  (c) to  deliver  to the  Exchange  Agent  the
certificates  representing the Original Notes tendered hereby or confirmation of
book-entry  transfer of such Original Notes into the Exchange Agent's account at
The  Depository  Trust Company,  in proper form for transfer,  together with the
Letter of  Transmittal  (or  facsimile  thereof),  properly  completed  and duly
executed,  with  any  required  signature  guarantees  and  any  other  required
documents,  within  three  New  York  Stock  Exchange  trading  days  after  the
expiration date.

Name of Firm: __________________________________________________________________

Address: _______________________________________________________________________

Area Code and Telephone Number: ________________________________________________

Authorized Signature: __________________________________________________________

Name: __________________________________________________________________________

Title: _________________________________________________________________________

Date: __________________________________________________________________________

NOTE: DO NOT SEND  CERTIFICATES  OF ORIGINAL NOTES WITH THIS FORM.  CERTIFICATES
FOR ORIGINAL NOTES SHOULD BE SENT ONLY WITH YOUR LETTER OF TRANSMITTAL.

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