EXHIBIT 12 (B)
<TABLE>


                     PUBLIC SERVICE ELECTRIC AND GAS COMPANY

               COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
                 PLUS PREFERRED SECURITIES DIVIDEND REQUIREMENTS

<CAPTION>

                                                                    Years Ended December 31,
                                                   1992           1993          1994          1995           1996
                                                ------------   -----------   -----------   ------------   -----------
                                                                       (Thousands of Dollars)
<S>                                                 <C>           <C>           <C>            <C>           <C>    
Earnings as Defined in Regulation S-K (A):
Net Income                                          475,936       614,868       659,406        616,964       535,071
Federal Income Taxes (B)                            223,782       307,414       301,447        325,737       267,619
Fixed Charges                                       411,493       401,046       408,045        418,825       437,812
                                                ------------   -----------   -----------   ------------   -----------
Earnings                                          1,111,211     1,323,328     1,368,898      1,361,526     1,240,502
                                                ============   ===========   ===========   ============   ===========

Fixed Charges as Defined in Regulation S-K (C):


Total Interest Expense (D)                          401,902       389,956       395,925        406,869       398,581
Interest Factor in Rentals                            9,591        11,090        12,120         11,956        11,490
Subsidiaries' Preferred Securities Dividend
    Requirements                                         --                                         --        27,741
                                                                       --            --
Preferred Stock Dividends                            31,907        38,114        42,147         49,426        23,161
Adjustment to Preferred Stock Dividends to
    state on a pre-income tax basis                  14,768        18,843        18,763         23,428        12,043
                                                ------------   -----------   -----------   ------------   -----------
Total Fixed Charges                                 458,168       458,003       468,955        491,679       473,016
                                                ============   ===========   ===========   ============   ===========

Ratio of Earnings to Fixed Charges                     2.43          2.89          2.92           2.77          2.62
                                                ============   ===========   ===========   ============   ===========
</TABLE>


Notes:

(A)  The term  "earnings"  shall be defined  as pretax  income  from  continuing
     operations.  Add to pretax income the amount of fixed  charges  adjusted to
     exclude (a) the amount of any  interest  capitalized  during the period and
     (b) the actual  amount of any  preferred  stock  dividend  requirements  of
     majority-owned  subsidiaries  which were  included  in such  fixed  charges
     amount but not deducted in the determination of pretax income.

(B) Includes state income taxes and federal income taxes for other income.

(C)  Fixed Charges represent (a) interest, whether expensed or capitalized,  (b)
     amortization  of debt  discount,  premium and  expense,  (c) an estimate of
     interest  implicit  in  rentals,  and  (d)  preferred  securities  dividend
     requirements of subsidiaries  and preferred stock  dividends,  increased to
     reflect the pre-tax  earnings  requirement for Public Service  Electric and
     Gas Company.

(D) Excludes 1992 interest expense on decommissioning cost $5,208.