EXHIBIT 8.1
OPINION OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP,
WITH RESPECT TO MATERIAL FEDERAL TAX MATTERS
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Exhibit 8.1
January 8, 2001
Public Service Electric and Gas Company
80 Park Plaza
Newark, New Jersey 07102
Re: PSE&G Transition Funding LLC
Ladies and Gentlemen:
In connection with the filing of Registration Statement No. 333-82635 on
Form S-3 relating to PSE&G Transition Funding LLC (the "Issuer"), as amended
from time to time, (the "Registration Statement") with the Securities and
Exchange Commission, you have requested our opinion regarding certain
descriptions of tax consequences contained in the form of prospectus (the
"Prospectus") included in the Registration Statement.
We have acted as special federal income tax counsel to the Issuer, in
connection with (a) the sale to the Issuer of PSE&G's Bondable Transition
Property, which is the property right created by New Jersey's Competition Act
representing the irrevocable right of Public Service Electric and Gas Company
("PSE&G") or its assignee to receive through a Transition Bond Charge amounts
sufficient to recover all of its Bondable Stranded Costs and (b) the Issuer's
issuance of Transition Bonds which are supported by the Bondable Transition
Property and which are offered and sold pursuant to Registration Statement No.
333-82635 on Form S-3, as amended from time to time (the "Registration
Statement" and such offered Transition Bonds (the "Offered Bonds").
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PSE&G
January 8, 2001
Page 2
In connection with our engagement, we have examined and relied upon the
forms of the Certificate of Formation of PSE&G Transition Funding LLC and the
Amended and Restated Limited Liability Company Agreement for PSE&G Transition
Funding LLC included as exhibits to the Registration Statement. In addition, the
opinion expressed below is based on the following assumptions:
(a) the Registration Statement will become effective;
(b) the proposed transactions are consummated as contemplated in the
Registration Statement;
(c) prior to the issuance of any series or class of Transition Bonds:
(i) all necessary orders, approvals and authorizations for the
Issuer's purchase from time to time of Bondable Transition
Property from PSE&G, in exchange for the net proceeds of
Transition Bonds will have been obtained by the Issuer;
(ii) the Amended and Restated Limited Liability Company Agreement
of the Issuer will have been executed and delivered by an
authorized representative of PSE&G as sole member of the
Issuer;
(iii) the Indenture will have been executed and delivered by the
Issuer's authorized representative and The Bank of New York,
as trustee;
(iv) the maturity dates, the bond rates, the redemption provisions
and the other terms of the Transition Bonds being offered will
be fixed in accordance with the terms of the Indenture;
(v) the Sale Agreement between the Issuer and PSE&G, as Seller,
will have been executed and delivered;
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PSE&G
January 8, 2001
Page 3
(vi) the Servicing Agreement between the Issuer and PSE&G, as
Servicer, will have been executed and delivered;
(vii) an unrevoked private letter ruling addressed to PSE&G with
respect to the issuance of the Transition Bonds will have been
issued by the Internal Revenue Service (the "PSE&G Private
Letter Ruling"); and
(viii) the Underwriting Agreement among the Issuer and the
underwriters of the Transition Bonds (the "Underwriting
Agreement") will have been executed and delivered;
(d) the Indenture will be qualified in accordance with the provisions of
the Trust Indenture Act of 1939, as amended.
Furthermore, we have, or will have, examined and considered executed
originals or counterparts, or certified or other copies identified to our
satisfaction as being true copies of such certificates, instruments, documents
and other corporate records of each of the Issuer and PSE&G and matters of fact
and law as we deem necessary for the purposes of the opinion expressed below,
and we have assumed (i) that such documents will in all material respects
conform to the descriptions provided therefor in the Registration Statement,
(ii) that such documents will not be amended and (iii) that the parties to such
documents will comply with the terms thereof. Capitalized terms not otherwise
defined herein have the respective meanings assigned to such terms in the
Registration Statement.
In our examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as certified or photostatic
copies and the authenticity of the originals of such latter documents. As to any
facts material to the opinions expressed herein which were not independently
established or verified, we have relied upon statements, representations, and
certifications of officers and other representatives of the Issuer, PSE&G, the
Underwriters and others.
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PSE&G
January 8, 2001
Page 4
In rendering our opinion, we have also considered and relied upon the
Internal Revenue Code of 1986, as amended, and administrative rulings, judicial
decisions, Treasury regulations, and such other authorities as we have deemed
appropriate, all as in effect as of the date hereof. In particular we have
relied on the PSE&G Private Letter Ruling. The statutory provisions, regulations
and interpretations upon which our opinion is based are subject to changes, and
such changes could apply retroactively. In addition, there can be no assurance
that positions contrary to those stated in our opinion may not be taken by the
Internal Revenue Service.
We also note that the Prospectus and the Underwriting Agreement do not
relate to a specific transaction. Accordingly, the above-referenced description
of federal income tax consequences may, under certain circumstances, require
modifi cation in the context of an actual transaction.
We express no opinions as to the laws of any jurisdiction other than the
federal laws of the United States of America to the extent specifically referred
to herein.
Based upon and subject to the foregoing, we are of the following opinions:
1. the Issuer will not be subject to United States federal income tax
as an entity separate from PSE&G; and
2. the statements in the Prospectus under the heading "Summary of Terms
Prospectus" and under the heading "Material Income Tax Matters for
the Transition Bonds" subject to the qualifications set forth
therein, accurately describe the material federal income tax
consequences to holders of the Offered Bonds that are not U.S.
persons (within the meaning of the Code), under existing law and the
assumptions stated therein.
Furthermore, subject to the qualifications and assumptions set forth therein, we
hereby adopt and confirm to you our opinion as set forth under the heading
"Material Income Tax Matters for the Transition Bonds" in the Prospectus.
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PSE&G
January 8, 2001
Page 5
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the references to Skadden, Arps, Slate, Meagher & Flom LLP
under the captions "Various Legal Matters Relating to the Transition Bonds" in
the Prospectus and "Material Income Tax Matters for the Transition Bonds" in
the Prospectus.
Very truly yours,
/s/ Skadden, Arps, Slate,
Meagher & Flom LLP
