EXHIBIT 4A

                              SUPPLEMENTAL MORTGAGE
 ------------------------------------------------------------------------------
                             Supplemental Indenture
                             DATED DECEMBER 1, 1996
                               ------------------
                                 SUPPLEMENTAL TO
                          FIRST AND REFUNDING MORTGAGE
                              DATED AUGUST 1, 1924
                               ------------------
                     PUBLIC SERVICE ELECTRIC AND GAS COMPANY
                                       TO
                            FIRST UNION NATIONAL BANK
                                     TRUSTEE
                                765 BROAD STREET
                            NEWARK, NEW JERSEY 07101
                               ------------------
                           PROVIDING FOR THE ISSUE OF
                       FIRST AND REFUNDING MORTGAGE BONDS,
                           POLLUTION CONTROL SERIES W

 ------------------------------------------------------------------------------
                     RECORD IN MORTGAGE BOOK AND RETURN TO:
                              JAMES T. FORAN, ESQ.
                               80 PARK PLAZA, T5B
                                  P.O. BOX 570
                               NEWARK, N.J. 07101

                           This instrument prepared by

                             (EDWARD C. FEDAK, ESQ.)



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                                TABLE OF CONTENTS
                                -----------------


                                                                          PAGE

-----------
RECITALS................................................................... 1
FORM OF BOND............................................................... 4
FORM OF CERTIFICATE OF AUTHENTICATION...................................... 9
GRANTING CLAUSES........................................................... 9

                                   ARTICLE I.
                    BONDS OF THE POLLUTION CONTROL SERIES W.

DESCRIPTION OF POLLUTION CONTROL SERIES W................................. 11

                                   ARTICLE II.
                REDEMPTION OF BONDS--POLLUTION CONTROL SERIES W.

SECTION 2.01.   Redemption--Redemption Prices............................. 12
SECTION 2.02.   Notice of Redemption...................................... 15
SECTION 2.03.   Interest on Called Bonds to Cease......................... 17
SECTION 2.04.   Bonds Called in Part...................................... 17
SECTION 2.05.   Provisions of Indenture not Applicable.................... 17

                                  ARTICLE III.
                        CREDITS WITH RESPECT TO THE BONDS
                       OF THE POLLUTION CONTROL SERIES W.

SECTION 3.01.   Credits................................................... 18
SECTION 3.02.   Certificate of the Company................................ 19

                                   ARTICLE IV.
                                 MISCELLANEOUS.

SECTION 4.01.   Authentication of Bonds of Pollution Control
                  Series W............................................... 19
SECTION 4.02.   Additional Restrictions on Authentication of Additional
                  Bonds Under Indenture.................................. 19
SECTION 4.03.   Restriction on Dividends................................. 20
SECTION 4.04.   Use of Facsimile Seal and Signatures..................... 21
SECTION 4.05.   Effective Period of Supplemental Indenture............... 21
SECTION 4.06.   Time for Making of Payment............................... 21
SECTION 4.07.  Effect of Approval of Board of Public Utilities
                  of the State of New Jersey............................. 21
SECTION 4.08.   Execution in Counterparts................................ 21

Acknowledgments.......................................................... 22

Certificate of Residence................................................. 24



<PAGE>



     SUPPLEMENTAL  INDENTURE,   dated  the  1st  day  of  December,   1996,  for
convenience  of reference and effective  from the time of execution and delivery
hereof, between PUBLIC SERVICE ELECTRIC AND GAS COMPANY, a corporation organized
under the laws of the State of New  Jersey,  hereinafter  called the  "Company",
party of the first  part,  and FIRST UNION  NATIONAL  BANK,  a national  banking
association organized under the laws of the United States of America, as Trustee
under the indenture dated August 1, 1924,  below mentioned,  hereinafter  called
the "Trustee", party of the second part.

     WHEREAS,  on July 25, 1924, the Company  executed and delivered to Fidelity
Union  Trust  Company  (now  known as First  Union  National  Bank),  a  certain
indenture dated August 1, 1924 (hereinafter  called the "Indenture"),  to secure
and to provide for the issue of First and  Refunding  Mortgage Gold Bonds of the
Company; and

     WHEREAS,  the Indenture has been recorded in the following  counties of the
State of New Jersey, in the offices,  and therein in the books and at the pages,
as follows:


                                                                   PAGE
COUNTY            OFFICE               BOOK NUMBER                 NUMBER
--------------  -----------  --------------------------------  ---------------
Atlantic        Clerk's           1955  of Mortgages                 160
Bergen          Clerk's             94  of Chattel Mortgages      123 etc.
                                   693  of Mortgages               88 etc.
Burlington      Clerk's             52  of Chattel Mortgages    Folio 8 etc.
                                   177  of Mortgages           Folio 354 etc.
Camden          Register's          45  of Chattel Mortgages      184 etc.
                                   239  of Mortgages               1 etc.
Cumberland      Clerk's            786  of Mortgages              638 & c.
Essex           Register's         437  of Chattel Mortgages        1-48
                                  T-51  of Mortgages               341-392
Gloucester      Clerk's             34  of Chattel Mortgages      123 etc.
                                   142  of Mortgages               7 etc.
Hudson          Register's         453  of Chattel Mortgages       9 etc.
                                  1245  of Mortgages              484 etc.
Hunterdon       Clerk's            151  of Mortgages                 344
Mercer          Clerk's             67  of Chattel Mortgages       1 etc.
                                   384  of Mortgages               1 etc.
Middlesex       Clerk's            113  of Chattel Mortgages       3 etc.
                                   437  of Mortgages              294 etc.
Monmouth        Clerk's            951  of Mortgages              291 & c.
Morris          Clerk's            N-3  of Chattel Mortgages      446 etc.
                                  F-10  of Mortgages              269 etc.
Ocean           Clerk's           1809  of Mortgages                 40
Passaic         Register's         M-6  of Chattel Mortgages      178 etc.
                                  R-13  of Mortgages              268 etc.
Salem           Clerk's            267  of Mortgages              249 & c.
Somerset        Clerk's             46  of Chattel Mortgages      207 etc.



<PAGE>



                                        2


                                                                   PAGE
COUNTY            OFFICE               BOOK NUMBER                 NUMBER
--------------  -----------  --------------------------------  ---------------
                                  N-10  of Mortgages               1 etc.
Sussex          Clerk's            123  of Mortgages               10 & c.
Union           Register's         128  of Chattel Mortgages       28 & c.
                                   664  of Mortgages              259 etc.
Warren          Clerk's            124  of Mortgages              141 etc.


and

     WHEREAS,  the Indenture has also been recorded in the following counties of
the Commonwealth of Pennsylvania,  in the offices,  and therein in the books and
at the pages, as follows:


                                                                   PAGE
COUNTY            OFFICE               BOOK NUMBER                 NUMBER
--------------  -----------  --------------------------------  ---------------
Adams           Recorder's          22  of Mortgages                 105
Armstrong       Recorder's         208  of Mortgages                 381
Bedford         Recorder's          90  of Mortgages                 917
Blair           Recorder's         671  of Mortgages                 430
Cambria         Recorder's         407  of Mortgages                 352
Cumberland      Recorder's         500  of Mortgages                 136
Franklin        Recorder's         285  of Mortgages                 373
Huntingdon      Recorder's         128  of Mortgages                 47
Indiana         Recorder's         197  of Mortgages                 281
Lancaster       Recorder's         984  of Mortgages                  1
Montgomery      Recorder's        5053  of Mortgages                1221
Westmoreland    Recorder's        1281  of Mortgages                 198
York            Recorder's        31-V  of Mortgages                 446


and

     WHEREAS,  the  Indenture  granted,   bargained,   sold,  aliened,  remised,
released,  conveyed,  confirmed,  assigned,  transferred  and set over  unto the
Trustee certain  property of the Company,  more fully set forth and described in
the Indenture,  then owned or which might thereafter be acquired by the Company;
and

     WHEREAS, the Company, by various supplemental  indentures,  supplemental to
the Indenture, the last of which was dated January 1, 1996 (No. 2), has granted,
bargained,  sold, aliened, remised,  released,  conveyed,  confirmed,  assigned,
transferred  and set over  unto the  Trustee  certain  property  of the  Company
acquired by it after the execution and delivery of the Indenture; and

     WHEREAS,  since the execution and delivery of said  supplemental  indenture
dated  January 1, 1996 (No.  2), the Company has  acquired  property  which,  in
accordance with the provisions of the Indenture,  is subject to the lien thereof
and the Company desires to confirm such lien; and



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                                        3


     WHEREAS, the Indenture has been amended or supplemented from time to time;
and

     WHEREAS,  it is provided in the Indenture that no bonds other than those of
the 5 1/2% Series due 1959 therein  authorized may be issued thereunder unless a
supplemental  indenture  providing for the issue of such additional  bonds shall
have been executed and delivered by the Company to the Trustee; and

     WHEREAS,  the New Jersey Economic  Development  Authority (the "Authority")
has previously  issued and sold its Pollution  Control Revenue  Refunding Bonds,
1987  Series  (Public  Service  Electric  and Gas  Company  Project)  (the "1987
Authority Bonds") to refinance the Authority's  Pollution Control Revenue Bonds,
1982  Series A (Public  Service  Electric  and Gas Company  Project)  which were
issued to finance the acquisition and construction of certain  pollution control
facilities at the Company's Bergen  Generating  Station,  Burlington  Generating
Station, Hudson Generating Station, Kearny Generating Station, Linden Generating
Station,  Mercer Generating  Station,  Sewaren Generating  Station,  Central Gas
Plant,  Harrison  Gas Plant  and West End Gas  Plant,  all of which are  located
within the State of New Jersey  (such  generating  stations and gas plants being
referred to  individually  as a "Plant"  and  collectively  as "Plants"  and the
pollution control  facilities being sometimes referred to herein separately as a
"Project" and collectively as "Projects"); and

     WHEREAS, the Authority is making provision for the issuance and sale of its
Pollution  Control  Revenue  Refunding  Bonds,  1996  Series A  (Public  Service
Electric and Gas Company Project) (the "1996 Authority  Bonds") to provide funds
for making a loan to the Company to provide for  refinancing of a portion of the
costs of the  Projects,  including  the  refunding  and  redemption  of the 1987
Authority Bonds; and

     WHEREAS,  the 1996 Authority Bonds are to be issued under a Trust Indenture
dated as of December 1, 1996, (the "Authority Indenture"), between the Authority
and First Union National Bank, as trustee (the "Authority Trustee"); and

     WHEREAS,  the Company has entered into a Pollution Control  Facilities Loan
Agreement  dated as of December 1, 1996, (the  "Agreement"),  with the Authority
providing,  among other things,  for the loan by the Authority to the Company of
funds to finance a portion of the costs of the Projects, including the refunding
and redemption of the 1987 Authority  Bonds, and for the issuance by the Company
to the Authority Trustee,  as assignee of the Authority,  of First and Refunding
Mortgage Bonds of the Company to evidence the Company's obligation to repay said
loan,  and for such  purposes  the  Company  desires to provide for the issue of
$23,500,000  aggregate  principal  amount of bonds secured by the Indenture of a
series to be  designated  as "First  and  Refunding  Mortgage  Bonds,  Pollution
Control Series W" (hereinafter  sometimes called "Pollution  Control Series W");
and

     WHEREAS, the text of the bonds of the Pollution Control Series W and of the
certificate of  authentication to be borne by the bonds of the Pollution Control
Series W shall be substantially of the following tenor:

                                 [FORM OF BOND]

     This Bond is not  transferable  except as provided  in the Trust  Indenture
dated as of  December  1,  1996  between  the New  Jersey  Economic  Development
Authority and First Union National Bank, as Trustee (the "Authority Indenture").
Capitalized terms used herein,  not otherwise  expressly  defined herein,  shall
have the meanings ascribed to them in the Authority Indenture.


<PAGE>



                                        4


REGISTERED                                                          REGISTERED
NUMBER                                                                AMOUNT
R-                                                                 $23,500,000


                     PUBLIC SERVICE ELECTRIC AND GAS COMPANY
                       FIRST AND REFUNDING MORTGAGE BOND,
                           POLLUTION CONTROL SERIES W


     Public Service Electric and Gas Company (hereinafter called the "Company"),
a corporation of the State of New Jersey, for value received, hereby promises to
pay to First Union National Bank, as trustee under the Authority  Indenture,  or
registered  assigns,  the  principal  sum of  Twenty-Three  Million Five Hundred
Thousand  Dollars,  on March 1, 2012, and to pay interest  thereon from the date
hereof, at the rate of 15.0% per annum, and until payment of said principal sum,
provided,  however,  that the Company shall receive certain credits against such
obligations  to the extent that interest  payable by the Authority  from time to
time for bonds issued  pursuant to the Authority  Indenture (the "1996 Authority
Bonds") is less than interest  calculated  pursuant to the foregoing  rate. Such
interest  to be payable at such times and in such  manner as interest is payable
on the 1996 Authority Bonds.

     Both  the  principal  hereof  and  interest  hereon  shall  be  paid at the
principal  office of First Union  National Bank in the City of Newark,  State of
New Jersey,  or at the corporate  trust office of any paying agent  appointed by
the Company,  in such coin or currency of the United States of America as at the
time of payment  shall  constitute  legal  tender for the  payment of public and
private debts.

     This Bond is one of the First and Refunding  Mortgage  Bonds of the Company
issued and to be issued under and  pursuant  to, and all equally  secured by, an
indenture of mortgage or deed of trust dated August 1, 1924, between the Company
and First Union National Bank (formerly  known as Fidelity Union Trust Company),
a national banking  association of the United States of America,  as Trustee, as
supplemented and amended by the supplemental  indentures thereto,  including the
supplemental  indenture dated December 1, 1996. This Bond is one of the Bonds of
the  Pollution  Control  Series W,  which  series is  limited  to the  aggregate
principal  amount of  $23,500,000  and is issued  pursuant to said  supplemental
indenture dated December 1, 1996. Reference is hereby made to said indenture and
all  supplements  thereto for a specification  of the principal  amount of Bonds
from time to time issuable  thereunder,  and for a description of the properties
mortgaged and conveyed or assigned to said Trustee or its successors, the nature
and extent of the security,  and the rights of the holders of said Bonds and any
coupons appurtenant thereto, and of the Trustee in respect of such security.



<PAGE>



                                        5


     In and by said indenture, as amended and supplemented,  it is provided that
with the written approval of the Company and the Trustee,  any of the provisions
of said  indenture  may from time to time be  eliminated  or modified  and other
provisions  may be added  thereto  provided the change does not alter the annual
interest rate,  redemption  price or date, date of maturity or amount payable on
maturity of any then  outstanding  Bond or conflict with the Trust Indenture Act
of 1939 as then in effect,  and provided the holders of 85% in principal  amount
of the Bonds secured by said indenture and then outstanding (including,  if such
change  affect the Bonds of one or more  series  but less than all  series  then
outstanding,  a like  percentage  of the then  outstanding  Bonds of each series
affected by such change,  and excluding Bonds owned or controlled by the Company
or by the parties  owning at least 10% of the  outstanding  voting  stock of the
Company,  as more fully specified in said indenture) consent in writing thereto,
all as more fully set forth in said indenture, as amended and supplemented.

     First and  Refunding  Mortgage  Bonds  issuable  under said  indenture  are
issuable  in series,  and the Bonds of any series may be for  varying  principal
amounts and in the form of coupon Bonds and of registered Bonds without coupons,
and the Bonds of any one series may differ from the Bonds of any other series as
to  date,  maturity,  interest  rate  and  otherwise,  all as in said  indenture
provided and set forth.  The Bonds of the Pollution  Control  Series W, in which
this Bond is included,  are  designated  "First and  Refunding  Mortgage  Bonds,
Pollution Control Series W".

     In case of the  happening  of an  event of  default  as  specified  in said
indenture and in the  supplemental  indenture  dated March 1, 1942  supplemental
thereto,  the  principal  sum of the Bonds of this issue may be  declared or may
become  due and  payable  forthwith,  in the  manner and with the effect in said
indenture provided.

     The Bonds of this  series are  subject to  redemption  as  provided in said
supplemental indenture dated December 1, 1996.

     This Bond is transferable,  but only as provided in the Authority Indenture
upon surrender  hereof,  by the  registered  owner in person or by attorney duly
authorized  in writing,  at the principal  office of the Trustee;  upon any such
transfer a new Bond similar hereto will be issued to the transferee.  No service
charge shall be made for any such transfer,  but the Company may require payment
of a sum  sufficient to cover any tax or other  governmental  charge that may be
imposed in relation  thereto.  The Company and the Trustee and any paying  agent
may deem and treat  the  person in whose  name  this Bond is  registered  as the
absolute  owner hereof for the purpose of receiving  payment of or on account of
the principal  hereof and the interest  hereon and for all other  purposes;  and
neither the  Company  nor the Trustee nor any paying  agent shall be affected by
any notice to the contrary.

     The Bonds of this series are issuable only in fully registered form, in any
denomination authorized by the Company.



<PAGE>



                                        6


     No recourse under or upon any obligation,  covenant or agreement  contained
in said indenture or in any indenture  supplemental  thereto,  or in any Bond or
coupon issued  thereunder,  or because of any indebtedness  arising  thereunder,
shall be had against any  incorporator,  or against any past,  present or future
stockholder,  officer or director,  as such,  of the Company or of any successor
corporation,   either   directly  or  through  the  Company  or  any   successor
corporation,  under any rule of law, statute or  constitutional  provision or by
the  enforcement  of any  assessment or by any legal or equitable  proceeding or
otherwise;  it being expressly  agreed and understood  that said indenture,  any
indenture supplemental thereto and the obligations issued thereunder, are solely
corporate obligations,  and that no personal liability whatever shall attach to,
or be incurred by, such incorporators,  stockholders,  officers or directors, as
such, of the Company, or of any successor  corporation,  or any of them, because
of the incurring of the indebtedness  thereby authorized,  or under or by reason
of any of the obligations, covenants or agreements contained in the indenture or
in any indenture  supplemental  thereto or in any of the Bonds or coupons issued
thereunder, or implied therefrom.

     This Bond shall not be  entitled  to any  security  or  benefit  under said
indenture, as amended and supplemented, and shall not become valid or obligatory
for any purpose, until the certificate of authentication, hereon endorsed, shall
have been signed by First Union National  Bank, as Trustee,  or by its successor
in trust under said indenture.

   IN WITNESS  WHEREOF,  the Company has caused this Bond to be duly executed by
its proper officers under its corporate seal.

Dated
                                    PUBLIC SERVICE ELECTRIC AND GAS COMPANY,

                                     By

                                                      (Vice) President

(Seal)
Attest:

        (Assistant) Secretary



<PAGE>



                                        7


                     [FORM OF CERTIFICATE OF AUTHENTICATION]
                          CERTIFICATE OF AUTHENTICATION

     This Bond is one of the Bonds of the series  designated  therein  which are
described in the  within-mentioned  indenture and  supplemental  indenture dated
December 1, 1996, as secured thereby.

                                      FIRST UNION NATIONAL BANK, TRUSTEE,
                                      BY

                              Authorized Signatory
                            ------------------------

     WHEREAS,  the execution and delivery of this  supplemental  indenture  have
been duly authorized by the Board of Directors of the Company; and

     WHEREAS, the Company represents that all things necessary to make the bonds
of the Pollution Control Series W hereinafter described, when duly authenticated
by the Trustee and issued by the Company,  valid,  binding and legal obligations
of the  Company,  and to make this  supplemental  indenture  a valid and binding
agreement supplemental to the Indenture, have been done and performed:

     NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH that the Company, in
consideration  of the premises and the  execution and delivery by the Trustee of
this  supplemental  indenture,  and in pursuance of the covenants and agreements
contained in the  Indenture and for other good and valuable  consideration,  the
receipt of which is hereby acknowledged,  has granted, bargained, sold, aliened,
remised, released, conveyed, confirmed,  assigned, transferred and set over, and
by these presents does grant,  bargain,  sell, alien, remise,  release,  convey,
confirm,  assign,  transfer and set over unto the Trustee,  its  successors  and
assigns, forever, all the right, title and interest of the Company in and to all
property  of  every  kind and  description  (except  cash,  accounts  and  bills
receivable and all  merchandise  bought,  sold or  manufactured  for sale in the
ordinary  course of the Company's  business,  stocks,  bonds or other  corporate
obligations  or  securities,  other than such as are  described in Part V of the
Granting  Clauses of the  Indenture,  not  acquired  with the  proceeds of bonds
secured by the  Indenture,  and except as in the Indenture and herein  otherwise
expressly  excluded) acquired by the Company since the execution and delivery of
the  supplemental  indenture dated January 1, 1996 (No. 2),  supplemental to the
Indenture  (except any such  property  duly  released  from, or disposed of free
from, the lien of the Indenture,  in accordance with the provisions thereof) and
all such property which at any time hereafter may be acquired by the Company;



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                                        8


     All of which  property it is  intended  shall be included in and granted by
this  supplemental  indenture  and  covered  by the  lien  of the  Indenture  as
heretofore and hereby amended and supplemented;

     UNDER AND SUBJECT to any  encumbrances  or  mortgages  existing on property
acquired  by the  Company  at the time of such  acquisition  and not  heretofore
discharged of record; and

     SUBJECT,  also,  to the  exceptions,  reservations  and  provisions  in the
Indenture  and in  this  supplemental  indenture  recited,  and  to  the  liens,
reservations, exceptions, limitations, conditions and restrictions imposed by or
contained  in the several  deeds,  grants,  franchises  and  contracts  or other
instruments  through which the Company acquired or claims title to the aforesaid
property; and SUBJECT, also, to existing leases, to liens on easements or rights
of way, to liens for taxes,  assessments and governmental charges not in default
or the payment of which is deferred,  pending  appeal or other  contest by legal
proceedings,  pursuant  to Section 4 of Article  Five of the  Indenture,  or the
payment  of  which  is  deferred  pending  billing,  transfer  of title or final
determination of amount, to easements for alleys, streets,  highways,  rights of
way and  railroads  that may run across or encroach upon the said  property,  to
joint pole and similar  agreements,  to undetermined liens and charges,  if any,
incidental to construction, and other encumbrances permitted by the Indenture as
heretofore and hereby amended and supplemented;

     TO HAVE AND TO HOLD the property hereby  conveyed or assigned,  or intended
to be conveyed or assigned,  unto the Trustee,  its successor or successors  and
assigns, forever;

     IN TRUST, NEVERTHELESS,  upon the terms, conditions and trusts set forth in
the Indenture as heretofore and hereby amended and supplemented, to the end that
the said  property  shall be subject to the lien of the  Indenture as heretofore
and hereby  amended and  supplemented,  with the same force and effect as though
said property had been included in the Granting  Clauses of the Indenture at the
time of the execution and delivery thereof;

     AND  THIS   SUPPLEMENTAL   INDENTURE   FURTHER   WITNESSETH  that  for  the
considerations  aforesaid,  it is hereby covenanted  between the Company and the
Trustee as follows:



<PAGE>



                                        9


                                   ARTICLE I.
                    BONDS OF THE POLLUTION CONTROL SERIES W.

     The series of bonds authorized by this supplemental  indenture to be issued
under and secured by the  Indenture  shall be  designated  "First and  Refunding
Mortgage Bonds,  Pollution  Control Series W"; shall be limited to the aggregate
principal  amount of  $23,500,000;  shall be issued  initially to the  Authority
Trustee, as assignee of the Authority,  to evidence the Company's  obligation to
repay the loan to finance a portion of the costs of the Projects  made  pursuant
to the Agreement; and shall mature and bear interest as set forth in the form of
bond hereinbefore described;  provided,  however, that the Company shall receive
certain  credits  against  principal  and interest  obligations  as set forth in
Section 3.01 hereof.  The date of each bond of the  Pollution  Control  Series W
shall be the interest  payment date next  preceding the date of  authentication,
unless such date of  authentication  be an interest  payment date, in which case
the  date  shall  be  the  date  of  authentication,  or  unless  such  date  of
authentication  be prior to the first  interest  payment date, in which case the
date shall be December 1, 1996.

     Bonds of the Pollution Control Series W shall be issued as fully registered
bonds in any  denomination  authorized by the Company.  Interest on bonds of the
Pollution  Control  Series W shall be payable at such time and in such manner as
interest  is payable on the 1996  Authority  Bonds,  subject to certain  credits
against  principal and interest as set forth in Section 3.01 hereof and shall be
payable as to both principal and interest in such coin or currency of the United
States of America as at the time of payment  shall  constitute  legal tender for
the payment of public and private debts, at the principal office of the Trustee,
or at the corporate trust office of any paying agent appointed by the Company.

     Bonds of the Pollution  Control Series W shall be transferable (but only as
provided in the Authority  Indenture) upon surrender thereof for cancellation by
the registered owner in person or by attorney duly authorized in writing at said
office of the Trustee.

     The Company  hereby  waives any right to make a charge for any  transfer of
bonds of the Pollution  Control Series W, but the Company may require payment of
a sum  sufficient  to cover  any tax or other  governmental  charge  that may be
imposed in relation thereto.



<PAGE>



                                       10


                                   ARTICLE II.
                REDEMPTION OF BONDS--POLLUTION CONTROL SERIES W.

     SECTION 2.01. Redemption--Redemption Prices. Bonds of the Pollution Control
Series W shall be subject to redemption prior to maturity,  under the conditions
and upon the  payment of the amounts  specified  in the  following  subsections,
together in each case with interest accrued to the redemption date:

          (a) at the option of the Company

               (i) whenever the Interest Rate Mode for the 1996 Authority  Bonds
is the Daily Rate or the Weekly Rate, in whole or in part, at a redemption price
of 100% of the principal amount thereof on any Interest Payment Date;

               (ii) whenever the Interest Rate Mode for the 1996 Authority Bonds
is the Commercial Paper Rate, in whole or in part, at a redemption price of 100%
of the principal amount thereof on the Interest Payment Date for each Commercial
Paper Rate Period for an Authority Bond or Bonds,  such  redemption to be in the
same principal amount of such Authority Bond or Bonds;

               (iii)  whenever  the  Interest  Rate Mode for the 1996  Authority
Bonds is the Auction Rate, in whole or in part, at a redemption price of 100% of
the principal amount thereof on the final Interest Payment Date for each Auction
Period;



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                                       11


               (iv) whenever the Interest Rate Mode for the 1996 Authority Bonds
is the Term Rate,  in whole or in part, on the final  Interest  Payment Date for
the then current Term Rate Period and, prior to the end of the then current Term
Rate Period,  at any time during the  redemption  periods and at the  redemption
prices set forth below, plus interest accrued, if any, to the redemption date:

<TABLE>
<CAPTION>

ORIGINAL LENGTH OF CURRENT         COMMENCEMENT OF                REDEMPTION PRICE AS
 TERM RATE PERIOD (YEARS)         REDEMPTION PERIOD             PERCENTAGE OF PRINCIPAL
--------------------------  -----------------------------  ---------------------------------
<S>                         <C>                            <C>
More than 15 years          Tenth anniversary of           102% declining by 1% on each
                            commencement of Term Rate      succeeding anniversary of the
                            Period                         first day of the redemption
                                                           period until reaching 100% and
                                                           thereafter 100%
More than 10 but not more   Seventh anniversary of         102% declining by 1% on each
than 15 years               commencement of Term Rate      succeeding anniversary of the
                            Period                         first day of the redemption
                                                           period until reaching 100% and
                                                           thereafter 100%
More than 5 but not more    Third anniversary of           101% declining by 1% on each
than 10 years               commencement of Term Rate      succeeding anniversary of the
                            Period                         first day of the redemption
                                                           period until reaching 100% and
                                                           thereafter 100%
More than 2 but not more    Second anniversary of          100% on and after such second
than 5 years                commencement of Term Rate      anniversary of the first day of
                            Period                         the redemption period

2 years or less             Non-callable                   Non-callable

</TABLE>

     If, at the time of the Company's notice of a change in the Term Rate Period
pursuant  to  Section  2.02(d)  of the  Authority  Indenture,  or its  notice of
Conversion of the Interest Rate Mode for the 1996

<PAGE>



                                       12


Authority  Bonds to the Term Rate  pursuant to Section  2.02(e) of the Authority
Indenture,  or, when the Interest Rate Mode for the 1996 Authority  Bonds is the
Term Rate,  at least 35 days prior to the Purchase  Date for the 1996  Authority
Bonds  pursuant to Section  3.01(b)(i) of the Authority  Indenture,  the Company
provides a certification of the Remarketing  Agent to the Authority  Trustee and
the Authority  that the foregoing  schedule is not  consistent  with  prevailing
market  conditions and an opinion of nationally  recognized  bond counsel that a
change  in the  redemption  provisions  of the  1996  Authority  Bonds  will not
adversely  affect  the  exclusion  from  gross  income of  interest  on the 1996
Authority  Bonds for  Federal  income tax  purposes,  the  foregoing  redemption
periods and  redemption  prices may be revised  effective as of the date of such
change in the Term Rate Period,  the Conversion  Date, or that Purchase Date, as
determined by the  Remarketing  Agent in its  judgment,  taking into account the
then Prevailing Market Conditions,  as stipulated in such  certification,  which
shall  be  appended  by the  Trustee  to its  counterpart  of this  supplemental
indenture.  Any such revision of redemption  periods or redemption  prices shall
not be considered an amendment of or supplement to this  supplemental  indenture
and shall not require the consent of any other person or entity.

          (b) in whole or in part (if, in the opinion of  nationally  recognized
bond counsel,  such partial  redemption  will preserve the exclusion  from gross
income for  Federal  income tax  purposes  of  interest  on the  remaining  1996
Authority  Bonds)  at any time at 100% of the  principal  amount  thereof  to be
redeemed, within 180 days after a "final determination" (i.e., the issuance of a
published or private ruling or technical advice) of the Internal Revenue Service
or a judicial decision in a proceeding by any court of competent jurisdiction in
the United  States (from which  ruling,  advice or decision no further  right of
appeal  exists),  in all cases in which the Company has  participated  or been a
party or has been given an opportunity  to  participate  and has failed to do so
(no such  decree or  judgment  by any court or  action by the  Internal  Revenue
Service to be  considered  final  unless the owner of the 1996  Authority  Bonds
involved in such  proceeding  or action has given the Company and the  Authority
Trustee  prompt  written  notice of the  commencement  thereof  and  offered the
Company,  at the  Company's  expense,  the  opportunity  to control  the defense
thereof)  that, as a result of a failure by the Company to observe any covenant,
agreement,  representation or warranty in the Agreement, the interest payable on
the 1996  Authority  Bonds is includable in the gross income for Federal  income
tax  purposes  of the holder  thereof,  other than a  "substantial  user" of the
Project or a "related  person" as  provided  in Section  147(a) of the  Internal
Revenue Code of 1986, as amended, and the applicable regulations thereunder.




<PAGE>



                                       13


          (c) in whole at 100% of the  principal  amount  thereof  whenever  the
Company  receives from the Authority  Trustee a copy of a written demand sent to
the Trustee stating that the principal of all  outstanding  1996 Authority Bonds
has been  declared  to be  immediately  due and  payable  because of an Event of
Default under the Authority Indenture.  In such case, redemption of the Bonds of
the Pollution  Control  Series W shall be any date selected by the Company,  not
more than 180 days after  receipt  by the  Company  of such  written  demand for
redemption.

          (d) to the  extent  that any of the 1996  Authority  Bonds  shall have
become  Provider  Bonds,  (i) on the Provider Bond  Redemption Date in an amount
equal to the aggregate  principal  amount of Provider  Bonds  outstanding at the
expiration of the Liquidity Facility at 100% of the principal amount thereof and
(ii) on each of the first four  anniversaries of the expiration of the Liquidity
Facility  at the  rate of 20% per  year of the  aggregate  principal  amount  of
Provider Bonds  outstanding at the expiration of the Liquidity  Facility at 100%
of the principal amount thereof.

     SECTION 2.02.  Notice of Redemption.  (a) The election of the Company under
subsection  (a) of  Section  2.01  hereof  to  redeem  any of the  bonds  of the
Pollution  Control  Series W shall be evidenced by a resolution  of the Board of
Directors  of the Company  calling for  redemption  on a stated date of all or a
stated principal  amount thereof.  To exercise its option to redeem the bonds of
the Pollution Control Series W under subsection (a) of Section 2.01 hereof,  the
Company shall deliver to the Trustee,  the Authority and the Authority Trustee a
certified copy of said resolution  calling all or a stated  principal  amount of
the bonds of the Pollution  Control  Series W for  redemption on a date not less
than 20 days (35 days if the Interest  Rate Mode is the Term Rate) nor more than
65 days  from the  date  said  resolution  is  delivered.  The  delivery  to the
Authority Trustee of a certified copy of such resolution shall constitute notice
to the Authority  Trustee of the  redemption  referred to therein,  on the terms
specified  therein.  The Company shall on or before such redemption date deposit
with the Trustee,  as paying agent hereunder,  the total  applicable  redemption
price  of all  the  bonds  so  called,  with  interest  accrued  thereon  to the
redemption date, less any credits to which the Company may be entitled  pursuant
to Section 3.01 hereof, and the Trustee,  as such paying agent, shall apply such
funds on the redemption date to the redemption of the bonds so called.



<PAGE>



                                       14


     (b) The  Company  shall,  within 10 days after the  occurrence  of a "final
determination"  under  subsection  (b) of Section  2.01  hereof,  deliver to the
Trustee  written notice of such "final  determination".  The Company  shall,  by
resolution of its Board of Directors,  fix a redemption date for such redemption
and shall deliver to the Trustee,  the  Authority  and the  Authority  Trustee a
certified copy of said resolution at least 40 days prior to the date so selected
for redemption. Such redemption date may be any day not more than 180 days after
the  occurrence of such "final  determination".  If the Trustee does not receive
written  notice of such  selection by the Company within 140 days after the date
of the occurrence of such "final determination",  then the redemption date shall
be the 180th  day after the  occurrence  of such  "final  determination".  On or
before such  redemption  date,  the Company shall  deposit with the Trustee,  as
paying agent hereunder,  the total redemption price of the bonds so called, with
interest  accrued thereon to the redemption  date, less any credits to which the
Company may be entitled  pursuant to Section  3.01 hereof,  and the Trustee,  as
such paying  agent,  shall  apply such funds,  on the  redemption  date,  to the
redemption of the bonds so called.  The delivery to the  Authority  Trustee of a
certified  copy of such  resolution  shall  constitute  notice to the  Authority
Trustee of the redemption referred to therein on the terms specified therein.

     (c) The Company shall, within 10 days after the receipt of a written demand
under  subsection  (c) of Section 2.01  hereof,  by  resolution  of its Board of
Directors,  fix a redemption  date for such  redemption and shall deliver to the
Trustee,  the  Authority  and the  Authority  Trustee a  certified  copy of said
resolution at least 40 days prior to the date so selected for  redemption.  Such
redemption  date may be any day not more than 180 days after the receipt of such
written demand. If the Trustee does not receive written notice of such selection
by the  Company  within 140 days after the date of the  receipt of such  written
demand,  then the  redemption  date shall be the 180th day after the  receipt of
such  written  demand.  On or before such  redemption  date,  the Company  shall
deposit with the Trustee, as paying agent hereunder,  the total redemption price
of the bonds so called,  with interest  accrued thereon to the redemption  date,
less any credits to which the Company may be entitled  pursuant to Section  3.01
hereof,  and the Trustee,  as such paying agent,  shall apply such funds, on the
redemption date, to the redemption of the bonds so called.



<PAGE>



                                       15


     SECTION  2.03.  Interest  on Called  Bonds to Cease.  Each bond or  portion
thereof of the Pollution  Control Series W called for  redemption  under Section
2.02  hereof  shall be due and payable at the office of the  Trustee,  as paying
agent  hereunder,  at the  applicable  redemption  price  and  on the  specified
redemption   date,   anything   herein   or  in  such   bond  to  the   contrary
notwithstanding.  From and after the date when each bond or  portion  thereof of
the  Pollution  Control  Series W shall be due and payable as aforesaid  (unless
upon said date the full amount due  thereon  shall not be held by or provided to
the  Trustee,  as paying  agent  hereunder,  and be  immediately  available  for
payment),  all  further  interest  shall cease to accrue on such bond or on such
portion thereof, as the case may be.

     SECTION  2.04.  Bonds Called in Part.  If only a portion of any bond of the
Pollution  Control Series W shall be called for  redemption  pursuant to Section
2.02 hereof,  the notice of redemption  hereinbefore  provided for shall specify
the portion of the principal amount thereof to be redeemed.  Upon payment of the
portion so called for redemption,  the Trustee, as paying agent hereunder, shall
give prompt written notice thereof to the Company.

     SECTION 2.05.  Provisions of Indenture Not  Applicable.  The  provisions of
Article Four of the Indenture,  as amended and supplemented,  shall not apply to
the  procedure  for the  exercise  of any right of  redemption  reserved  by the
Company,  or to any mandatory  redemption provided in this Article in respect of
the bonds of the Pollution  Control Series W. There shall be no sinking fund for
the bonds of the Pollution Control Series W.

                                   ARTICLE III
                    CREDITS WITH RESPECT TO THE BONDS OF THE
                           POLLUTION CONTROL SERIES W.

     SECTION  3.01.  Credits.  (a) In addition to any other  credit,  payment or
satisfaction  to which the Company is entitled  with respect to the Bonds of the
Pollution  Control  Series W, the  Company  shall be  entitled  credits  against
amounts  otherwise  payable  in respect  of the Bonds of the  Pollution  Control
Series W in an amount  corresponding  to the amount by which interest due on the
Bonds of the  Pollution  Control  Series W exceeds the  interest due on the 1996
Authority Bonds.



<PAGE>



                                       16


     (b) The  Company  shall be entitled to credits  against  amounts  otherwise
payable in respect of the bonds of the Pollution  Control  Series W in an amount
corresponding to (i) the principal amount of any 1996 Authority Bond surrendered
to the Authority  Trustee by the Company or the  Authority,  or purchased by the
Authority  Trustee,  for  cancellation  and (ii) the amount of money held by the
Authority Trustee and available and designated for or applied toward the payment
of principal or redemption price of and interest on the 1996 Authority Bonds, as
the case may be, regardless of the source of payment to the Authority Trustee of
such moneys;  provided,  however,  that the Company shall not be entitled to any
such credit with respect to amounts paid to the  Authority  Trustee  pursuant to
the Bond Insurance Policy.  The Trustee,  as paying agent hereunder,  shall give
prompt  written  notice to the Company of any such  credit  with  respect to the
payment of interest.

     (c) The Trustee,  as paying agent hereunder,  shall (i) promptly notify the
Company of each  deposit in the Bond Fund under the  Authority  Indenture,  (ii)
provide evidence to the Company that such deposit has been credited to such Fund
and (iii) give prompt  written notice to the Company of any credits with respect
to payment of principal or redemption  price of and interest on the bonds of the
Pollution Control Series W.

     SECTION 3.02.  Certificate  of the Company.  A  certificate  of the Company
signed by the  President,  any Vice  President or any Assistant  Treasurer,  and
attested to by the Secretary or any Assistant Secretary, and consented to by the
Authority  Trustee,  stating  that the  Company is  entitled  to a credit  under
Section 3.01 hereof and setting forth the basis  therefor in reasonable  detail,
shall be conclusive  evidence of such entitlement,  and the Trustee shall accept
such certificate as such evidence without further  investigation or verification
of the matters stated therein.



<PAGE>



                                       17


                                   ARTICLE IV.
                                 MISCELLANEOUS.

     SECTION 4.01.  Authentication  of Bonds of Pollution Control Series W. None
of the bonds of the Pollution  Control  Series W, the issue of which is provided
for by this supplemental indenture, shall be authenticated by the Trustee except
in accordance with the provisions of the Indenture, as amended and supplemented,
and this supplemental indenture, and upon compliance with the conditions in that
behalf therein contained.

     SECTION 4.02. Additional Restrictions on Authentication of Additional Bonds
Under Indenture. The Company covenants that from and after the date of execution
of this supplemental  indenture, no additional bonds (as defined in Section 1 of
Article  Two of the  Indenture)  shall be  authenticated  and  delivered  by the
Trustee  under  Subdivision  A of  Section 4 of said  Article  Two on account of
additions or improvements to the mortgaged property

          (1) unless the net earnings of the Company for the period  required by
Subdivision  C of Section 6 of said  Article  Two shall have been at least twice
the fixed  charges  (in lieu of 1 3/4 times such fixed  charges,  as required by
said  Subdivision  C);  and for the  purpose  of this  condition  (a) such fixed
charges  shall  in  each  case  include  interest  on  the  bonds  applied  for,
notwithstanding  the  parenthetical  provision  contained  in clause (4) of said
Subdivision C, and (b) in computing such net earnings there shall be included in
expenses of operation  (under  paragraph (c) of said  Subdivision C) all charges
against  earnings  for   depreciation,   renewals  or   replacements,   and  all
certificates with respect to net earnings delivered to the Trustee in connection
with any  authentication  of  additional  bonds under said  Article Two shall so
state; and

          (2)  except  to the  extent  of 60% (in  lieu of 75% as  permitted  by
Subdivision A of Section 7 of said Article Two) of the cost or fair value to the
Company  of  the   additions  or   improvements   forming  the  basis  for  such
authentication of additional bonds.



<PAGE>



                                       18


     SECTION 4.03. Restriction on Dividends. The Company will not declare or pay
any dividend on any shares of its common stock (other than dividends  payable in
shares of its common stock) or make any other  distribution  on any such shares,
or purchase or otherwise acquire any such shares (except shares acquired without
cost to the Company) whenever such action would reduce the earned surplus of the
Company to an amount less than  $10,000,000  or such lesser amount as may remain
after  deducting  from said  $10,000,000  all amounts  appearing in the books of
account of the Company on December 31, 1948, which shall thereafter, pursuant to
any order or rule of any regulatory body entered after said date, be required to
be  removed,  in whole or in part,  from the books of account of the  Company by
charges to earned surplus.

     SECTION 4.04. Use of Facsimile Seal and Signatures. The seal of the Company
and any or all  signatures  of the officers of the Company upon any of the bonds
of the Pollution Control Series W may be facsimiles.

     SECTION 4.05.  Effective  Period of Supplemental  Indenture.  The preceding
provisions of Articles I, II and III of this supplemental indenture shall remain
in effect  only so long as any of the bonds of the  Pollution  Control  Series W
shall remain outstanding.

     SECTION  4.06.  Time for Making of Payment.  All  payments of  principal or
redemption price of and interest on the bonds of the Pollution  Control Series W
shall  be made to the  Authority  Trustee  in such  funds  as  shall  constitute
immediately  available  funds when payment is due. In any case where the date of
payment of the principal or redemption  price of or interest on the bonds of the
Pollution  Control  Series W or the date fixed for  redemption of any such bonds
shall be in the city of payment a Saturday,  Sunday or a legal  holiday or a day
on which banking  institutions are authorized by law to close, then such payment
need not be made on such  date but may be made on the next  succeeding  business
day with the same  force and  effect as if made on the date of  maturity  or the
date fixed for redemption,  and no interest on such payment shall accrue for the
period after such date.



<PAGE>



                                       19


     SECTION 4.07.  Effect of Approval of Board of Public Utilities of the State
of New Jersey. The approval of the Board of Public Utilities of the State of New
Jersey of the execution  and delivery of these  presents and of the issue of any
bonds of the  Pollution  Control  Series W shall not be construed as approval of
said Board of any other act,  matter or thing  which  requires  approval of said
Board under the laws of the State of New Jersey.

     SECTION 4.08.  Execution in  Counterparts.  For the purpose of facilitating
the recording hereof,  this supplemental  indenture has been executed in several
counterparts,  each of which shall be and shall be taken to be an original,  and
all collectively but one instrument.

     IN WITNESS WHEREOF,  Public Service Electric and Gas Company,  party hereto
of the first part,  after due corporate and other  proceedings,  has caused this
supplemental  indenture to be signed and acknowledged or proved by its President
or one of its Vice  Presidents and its corporate seal hereunto to be affixed and
to be attested by the signature of its Secretary or an Assistant Secretary;  and
First Union  National  Bank,  as Trustee,  party hereto of the second part,  has
caused this  supplemental  indenture to be signed and  acknowledged or proved by
its  President,  one of its  Vice  Presidents  or  one  of  its  Assistant  Vice
Presidents and its corporate  seal to be hereunto  affixed and to be attested by
the signature of one of its Vice  Presidents,  Assistant  Vice  Presidents,  its
Cashier, one of its Assistant Cashiers,  or one of its Corporate Trust Officers.
Executed and delivered this 2nd day of December, 1996.

                                     PUBLIC SERVICE ELECTRIC AND GAS COMPANY

                                     By
                                                       /s/F.J. Riepl
                                                        (F. J. Riepl)
                                                       Vice President

Attest:
         /s/E.J. Biggins Jr. 
        (E. J. Biggins, Jr.)
              Secretary

                                           FIRST UNION NATIONAL BANK

                                       By
                                                       /s/F. Gallagher
                                                       (F. Gallagher)
                                                       Vice President

Attest:
            /s/ J.J. Waters
            (J.J. Waters)
           Vice President



<PAGE>



                                       20


                             A
STATE OF NEW JERSEY
C
                                   ss.:
D
COUNTY OF ESSEX

     BE IT REMEMBERED,  that on this 2nd day of December,  1996,  before me, the
subscriber,  a Notary Public of the State of New Jersey,  personally appeared F.
J. Riepl who, I am satisfied, is a Vice President of PUBLIC SERVICE ELECTRIC AND
GAS COMPANY,  one of the corporations  named in and which executed the foregoing
instrument, and is the person who signed the said instrument as such officer for
and on behalf of such  corporation,  and I having  first  made  known to him the
contents thereof,  he did acknowledge that he signed the said instrument as such
officer,  that the said instrument was made by such  corporation and sealed with
its corporate  seal,  that the said  instrument is the voluntary act and deed of
such corporation,  made by virtue of authority from its Board of Directors,  and
that  said  corporation,  the  mortgagor,  has  received  a true  copy  of  said
instrument.

                                             /s/ Catherine M. Golda
                                             Catherine M. Golda
                                             A Notary Public of New Jersey
                                             My Commission Expires 5-14-2000

                             A
STATE OF NEW JERSEY
C
                                   ss.:
D
COUNTY OF ESSEX

     BE IT REMEMBERED,  that on this 2nd day of December,  1996,  before me, the
subscriber,  a Notary Public of the State of New Jersey,  personally appeared F.
Gallagher who, I am satisfied, is a Vice President of FIRST UNION NATIONAL BANK,
one of the  corporations  named in and which executed the foregoing  instrument,
and is the person who signed the said  instrument  as such  officer,  for and on
behalf of such  corporation,  and I having  first made known to him the contents
thereof,  he did acknowledge that he signed the said instrument as such officer,
that the  said  instrument  was made by such  corporation  and  sealed  with its
corporate  seal;  and that the said  instrument is the voluntary act and deed of
such corporation, made by virtue of authority from its Board of Directors.

                                             /s/ Bernice Rivera
                                             Notary Public of New Jersey
                                             Commission Expires May 10, 2001

<PAGE>


                                       21


                            CERTIFICATE OF RESIDENCE

     First Union  National  Bank,  Mortgagee and Trustee  within  named,  hereby
certifies  that its precise  residence is 765 Broad Street,  Newark,  New Jersey
07101.

                                           FIRST UNION NATIONAL BANK

                                       By
                                                        /s/ F. Gallangher
                                                        (F. Gallagher)
                                                        Vice President