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                                                                [REI-EXHIBIT 12]

                HOUSTON INDUSTRIES INCORPORATED AND SUBSIDIARIES
               D/B/A RELIANT ENERGY INCORPORATED AND SUBSIDIARIES

               COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
                             (THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                                                   TWELVE MONTHS ENDED DECEMBER 31,
                                                   -----------------------------------------------------------------
                                                       1998          1997         1996          1995         1994
                                                   -----------   -----------   -----------   ----------   ----------
Fixed Charges as Defined:

<S>                                                <C>           <C>           <C>           <C>          <C>       
(1)      Interest on Long-Term Debt............... $   416,138   $   320,845   $   276,242   $  279,491   $  265,494

(2)      Other Interest...........................      97,767        77,112        33,738       21,586       25,076

(3)      Capitalized Interest.....................       9,565         7,721

(4)      Distribution on Trust Securities.........      29,201        26,230

(5)      Preferred Dividends Factor of Subsidiary.           0         3,360        33,619       44,933       51,718

(6)      Interest Component of Rentals Charged to                                                                    
        Operating Expense.........................       9,966         5,692           942        3,102        3,951

                                                   -----------   -----------   -----------   ----------   ----------
(7)      Total Fixed Charges...................... $   562,637   $   440,960   $   344,541   $  349,112   $  346,239
                                                   ===========   ===========   ===========   ==========   ==========

Earnings as Defined:

(8)      Income from Continuing Operations........ $  (141,092)  $   421,110   $   404,944   $  397,400   $  423,985

(9)      Income Taxes for Continuing Operations...     (30,432)      206,374   $   200,165      199,555      230,424

(10)     Fixed Charges (line 7)...................     562,637       440,960   $   344,541      349,112      346,239

(11)     Capitalized Interest (Line 3)............      (9,565)       (7,721)

                                                   -----------   -----------   -----------   ----------   ----------
(12)     Income from Continuing Operations Before                                                                    
        Income Taxes and Fixed Charges............ $   381,548   $ 1,060,723   $   949,650   $  946,067   $1,000,648
                                                   ===========   ===========   ===========   ==========   ==========

Preferred Dividends Factor of Subsidiary:

(13)     Preferred Stock Dividends of Subsidiary.. $         0   $     2,255   $    22,563   $   29,955   $   33,583

(14)     Ratio of Pre-Tax Income from Continuing                                                                     
        Operations to Income from Continuing                                                                         
        Operations(line 8 plus line 9 divided,                                                                       
        (line 8)..................................        1.22          1.49          1.49          1.50         1.54

                                                   -----------   -----------   -----------   ----------   ----------
(15)     Preferred Dividends Factor of Subsidiary                                                                    
        (line 14 times line 13)................... $         0   $     3,360   $    33,619   $   44,933   $   51,718
                                                   ===========   ===========   ===========   ==========   ==========

Ratio of Earnings from Continuing Operations to                                                                      
   Fixed Charges Before Cumulative Effect of                                                                         
   Change in Accounting (line 12 divided by line                                                                     
   7).............................................                      2.41          2.76          2.71         2.89
</TABLE>


In 1998 earnings are inadequate to cover fixed charges by approximately $181
million. This deficiency results from the $1.2 billion non-cash, unrealized
accounting loss recorded for the ACES. Excluding the effect of the non-cash,
unrealized accounting loss of $764 million, the ratio of earnings from the
continuing operations to fixed charges would have been 2.77.

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