EXHIBIT 5

September 10, 2001

PSEG Energy Holdings Inc.
80 Park Plaza
Newark, NJ 07101

RE: PSEG Energy Holdings Inc.
Registration Statement on Form S-4
$400,000,000 8.625% Senior Notes due 2008

Ladies and Gentlemen:

I am Associate General Counsel of Public Service  Enterprise Group  Incorporated
and in that capacity have acted as counsel for its wholly-owned subsidiary, PSEG
Energy Holdings Inc., a New Jersey corporation (the Corporation),  in connection
with the  Corporation's  preparation  and filing of a Registration  Statement on
Form  S-4,  to be  filed  with  the  Securities  and  Exchange  Commission  (the
Commission)  under the  Securities  Act of 1933,  as amended  (the Act) and with
which this letter is filed with the  Commission  as Exhibit 5 (the  Registration
Statement)  relating  to  an  offer  (the  Exchange  Offer)  to  exchange  up to
$400,000,000 aggregate principal amount of the Corporation's 8.625% Senior Notes
due 2008 (the Exchange  Notes) for a like  principal  amount of its  outstanding
8.625%  Senior  Notes  due 2008 (the  Original  Notes),  to be  issued  under an
indenture  dated as of October 8, 1999 (the  Indenture)  between the Corporation
and First Union National Bank as Trustee (the Trustee).

In connection  with this opinion,  I, or member of my staff,  have examined such
documents and records as I have deemed  necessary or  appropriate as a basis for
the opinions set forth  herein.  In such  examination,  I have assumed the legal
capacity  of  all  natural  persons,  the  genuineness  of all  signatures,  the
authenticity  of all documents  submitted to me as originals,  the conformity to
original documents of all documents  submitted to me as certified,  conformed or
photostatic  copies  and  the  authenticity  of the  originals  of  such  latter
documents.  In making such  examination  of  documents,  I have assumed that the
parties thereto, other than the Corporation,  had the power, corporate or other,
to enter into and perform all  obligations  thereunder and have also assumed the
due  authorization  by all requisite action corporate or other and execution and
delivery by such parties of such  documents and the validity and binding  effect
thereof on such parties.

My opinions  set forth herein are limited to the laws of the State of New Jersey
and federal laws of the United States. I do not express any opinion with respect
to the law of any other  jurisdiction  or the securities or blue sky laws of any
state.

Based upon and subject to the  foregoing  and the  limitations,  qualifications,
exceptions and assumptions  set forth herein,  I am of the opinion that when (a)
the Exchange Notes have been duly executed and  authenticated in accordance with
the terms of the Indenture and delivered upon consummation of the Exchange Offer
against  receipt of the  Original  Notes  surrendered  in exchange  therefore in
accordance  with  the  terms  of the  Exchange  Offer  and (b) the  Registration
Statement shall have become effective under the Act and the Indenture shall have
been qualified under the Trust  Indenture Act of 1939, as amended,  the Exchange
Notes will constitute valid and binding obligations of the Corporation  entitled
to the benefits of the  Indenture and  enforceable  against the  Corporation  in
accordance with their terms, except to the extent the enforcement thereof may be
limited by (i) bankruptcy,  insolvency,  reorganization,  moratorium, fraudulent
conveyance  or other  similar  laws now or  hereinafter  in effect  relating  to
creditors' rights generally and (ii) general principles of equity (regardless of
whether enforcement is considered in a proceeding at law or in equity).

I hereby consent to the filing of this opinion as Exhibit 5 to the  Registration
Statement.  I also  consent  to the  reference  to me under  the  caption  Legal
Opinions in the Registration Statement.

Very truly yours,

      /s/ James T. Foran
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          James T. Foran
          Associate General Counsel