EXHIBIT 8

September 10, 2001

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

RE: PSEG Energy Holdings Inc.
    Exchange Offer for $400,000,000 8.625%
    Senior Notes due 2008
    Certain Federal Income Tax Considerations

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 preparation of a Registration  Statement on Form S-4 (the  Registration
Statement),  which is being filed with the  Securities  and Exchange  Commission
under the  Securities  Act of 1933,  as amended (the Act),  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).

I, or member of my staff, have reviewed a copy of the Registration Statement and
such other  documents as I have deemed  necessary or  appropriate as a basis for
the opinion set forth below.

Based on the  foregoing,  I am of the opinion  that if the offer and sale of the
Exchange  Notes are conducted in the manner  described in the  Prospectus and if
the  terms  of the  Exchange  Notes  are  as  contemplated  by the  Registration
Statement,  then the exchange of the Original  Notes for Exchange Notes pursuant
to the Exchange  Offer will not  constitute a  significant  modification  of the
terms of the Original Notes and, therefore, such exchange will not constitute an
exchange for federal  income tax  purposes  and will have no federal  income tax
consequences to holders of the Original Notes.

The opinion expressed herein is based upon existing statutory,  regulatory,  and
judicial  authority,  any of which may be changed  at any time with  retroactive
effect.  In addition,  my opinion is based solely on the  documents  that I have
examined,  the authenticity of which I assume,  such other information as I have
deemed necessary or appropriate.  My opinion cannot be relied upon if any of the
facts  contained  in  such  documents  or  information  is,  or  later  becomes,
inaccurate.  Finally,  my opinion is  limited  to the tax  matters  specifically
covered herein, and I have not been asked to address, nor have I addressed,  any
other tax consequences of the Exchange Offer.

I hereby consent to the filing of this opinion as Exhibit 8 to the  Registration
Statement.  I also consent to the  reference  to me under the  captions  Federal
Income Tax Considerations and Legal Opinions in the Registration Statement.

Very truly yours,

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