PUBLIC SERVICE ELECTRIC AND GAS COMPANY


                                       and


              FIRST FIDELITY BANK, NATIONAL ASSOCIATION, as Trustee



                          FIRST SUPPLEMENTAL INDENTURE


                          Dated as of September 1, 1995


                                       to


                                    INDENTURE


                          Dated as of November 1, 1994








            8% Deferrable Interest Subordinated Debentures, Series B



<PAGE>




                                TABLE OF CONTENTS


                                                                  Page


ARTICLE 1   .......................................................  2
            SECTION 1.01...........................................  2

ARTICLE 2   .......................................................  2
            SECTION 2.01...........................................  2

ARTICLE 3   .......................................................  4
            SECTION 3.01...........................................  4

ARTICLE 4   .......................................................  4
            SECTION 4.01...........................................  4
            SECTION 4.02...........................................  4
            SECTION 4.03...........................................  5
            SECTION 4.04...........................................  5
            SECTION 4.05...........................................  5
            SECTION 4.06...........................................  5
            SECTION 4.07...........................................  6






                                        i    

<PAGE>

     FIRST SUPPLEMENTAL INDENTURE,  dated as of September 1, 1995 by and between
Public  Service  Electric and Gas Company,  a  corporation  duly  organized  and
existing  under the laws of the State of New Jersey  (the  "Company" ) and First
Fidelity Bank, National  Association,  a national banking association  organized
and  existing  under the laws of the United  States of America,  as trustee (the
"Trustee")  under the Indenture dated as of November 1, 1994 between the Company
and the Trustee.

     WHEREAS,  the Company  executed and  delivered  the  Indenture  dated as of
November 1, 1994 to the Trustee to provide  for the  issuance of its  deferrable
interest subordinated  debentures (the "Debentures") in series from time to time
as might be  determined  by the Company and  pursuant  thereto,  the Company has
issued its 9-3/8% Deferrable Interest Subordinated Debentures, Series A.

     WHEREAS,  the Company is the general partner of Public Service Electric and
Gas Capital,  L.P., a New Jersey limited partnership (the "Partnership"),  which
intends  to  issue  an  additional  series  of  its  limited  partner  interests
designated 8% Cumulative  Monthly  Income  Preferred  Securities,  Series B (the
"Series B Preferred Securities") and to loan the proceeds thereof, together with
the investment by the Company,  as its sole general partner,  in the Partnership
to the Company.

     WHEREAS, in order to evidence its intention to make such loan and to accept
the  Debentures  as evidence of such loan,  and its approval of the terms of the
Series B Debentures (as hereinafter defined), the Partnership has joined in this
First Supplemental Indenture.

     WHEREAS,  the  Company has  authorized  the  issuance of its 8%  Deferrable
Interest  Subordinated  Debentures,  Series B (the  "Series  B  Debentures")  to
evidence its  obligations  with respect to the loan from the  Partnership of the
proceeds of the Series B Preferred  Securities and the related investment by the
Company,  as its  sole  general  partner,  in the  Partnership,  and to  provide
therefor,  the Company has duly  authorized  the  execution and delivery of this
First Supplemental Indenture.

     WHEREAS,  all things  necessary to make the Series B  Debentures  when duly
issued and executed by the Company and  authenticated  and delivered  hereunder,
the  valid  obligations  of the  Company,  and to make this  First  Supplemental
Indenture a valid and binding  agreement of the Company,  in accordance with its
terms, have been done.

                        NOW THEREFORE:

     Each of the Company and the Trustee,  intending to be legally bound hereby,
agrees as  follows  for the  benefit  of the  other  party and for the equal and
ratable  benefit  of the  holders  of the  Debentures,  including  the  Series B
Debentures:




<PAGE>
                       
                                    ARTICLE 1
                                   DEFINITIONS

SECTION 1.01 Definitions.

     The following  terms used in this First  Supplemental  Indenture shall have
the following meanings:

     "Additional  Interest",  with respect to the Series B Debentures,  means an
amount equal to and payable at the same time as any Additional  Amounts  payable
on the Series B Preferred  Securities,  as defined in the action pursuant to the
Limited Partnership Agreement creating the Series B Preferred  Securities,  plus
amounts,  if any,  which  the  Partnership  would be  required  to pay as taxes,
duties,  assessments  or  governmental  charges of whatever  nature  (other than
withholding  taxes) imposed by the United States, or any other taxing authority,
with  respect to the Series B  Debentures  so that the net amounts  received and
retained by the Partnership after paying any such taxes, duties, assessments, or
governmental  charges  will not be less than the amounts the  Partnership  would
have received had no such taxes,  duties,  assessments or  governmental  charges
been imposed.

     "Debentureholder"  or  "Holder"  means a Person  in  whose  name a Series B
Debenture is registered on the Registrar's books.

     "Series B Debentures"  means any of the  Company's 8%  Deferrable  Interest
Subordinated Debentures, Series B issued under this Indenture.

     "Series  B  Preferred  Securities"  means  the  limited  partner  interests
designated 8% Cumulative Monthly Income Preferred Securities, Series B issued by
the Partnership.

     Each of the other terms used in this First  Supplemental  Indenture that is
defined in the Indenture and not defined herein shall have the meaning  assigned
to it in the Indenture.

                                    ARTICLE 2
                             THE SERIES B DEBENTURES

SECTION 2.01 Terms and Form of the Series B Debentures

     The Series B Debentures  shall be designated  "Public Service  Electric and
Gas  Company 8%  Deferrable  Interest  Subordinated  Debentures,  Series B." The
Series B Debentures  and the Trustee's  Certificate of  Authentication  shall be
substantially in the form of Exhibit A attached hereto. The terms and provisions
contained in the Series B Debentures shall constitute,  and are hereby expressly
made, a part of this First Supplemental Indenture.  The Company and the Trustee,
by their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.
<PAGE>
     The aggregate  principal  amount of Series B Debentures  outstanding at any
time may not  exceed  $61,855,670  except as  provided  in  Section  2.09 of the
Indenture to be initially  authenticated  and  delivered  from time to time upon
delivery  to the  Trustee  of the items  specified  in  Section  2.04(d)  of the
Indenture.

     The Stated  Maturity Date of the Series B Debentures is September 15, 2044.
The  interest  rate of the Series B Debentures  is 8% per annum plus  Additional
Interest, if any.

     The  Interest  Payment  Dates  for the  Series  B  Debentures  are the last
calendar day of each month of each year  commencing  September  30, 1995. In the
event that any date on which  interest is payable on the Series B Debentures  is
not a Business Day,  then payment of interest  payable on such date will be made
on the next day which is a  Business  Day (and  without  any  interest  or other
payment in respect of any such delay),  except that,  if such Business Day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding  Business  Day, in each case with the same force and effect as if made
on such date.  The Regular  Record Date for each  Interest  Payment Date for the
Series B Debentures  shall be the 15th day of each month,  provided  that if the
Partnership  is the sole  Holder  of the  Series B  Debentures  or the  Series B
Debentures are issued in book-entry-only  form, the Regular Record Date shall be
the close of business on the Business Day next preceding  such Interest  Payment
Date.

     Each Series B Debenture shall bear interest from its Issue Date or from the
most  recent  Interest  Payment  Date to which  interest  has been  paid or duly
provided for with respect to such Series B  Debenture;  except that,  so long as
there is no  existing  Defaulted  Interest or  Extension  Period on the Series B
Debentures,  any Series B Debenture  authenticated  by the  Trustee  between the
Regular Record Date for any Interest Payment Date and such Interest Payment Date
shall bear interest from such Interest Payment Date.

     Overdue  principal of, and interest on, any Series B Debenture and interest
which has been deferred  pursuant to Section 4.01(b) of the Indenture shall bear
interest  (to the  extent  that the  payment of such  interest  shall be legally
enforceable) at a rate per annum equal to the interest rate per annum, including
Additional Interest, if any, payable on such Series B Debenture.

     The Series B Debentures  shall be issuable only in registered  form without
coupons and only in denominations of $25 and any integral multiple thereof.

     The  Trustee  shall  initially  be  the  Paying  Agent  for  the  Series  B
Debentures.
<PAGE>

                                    ARTICLE 3
                                   REDEMPTION


SECTION 3.01 Redemption; Notice to Trustee.

     (a) The Series B Debentures are subject to redemption  prior to maturity as
provided therein.

     (b) The Series B Debentures  shall be subject to mandatory  redemption upon
the  dissolution  and  winding  up of the  Partnership,  unless,  in  connection
therewith,  the Series B Debentures are distributed to the holders of the Series
B Preferred Securities in accordance with the terms thereof.

     (c) Any redemption of the Series B Debentures  shall be made in the manner,
upon the terms and with the effect,  all as provided in Sections 3.01(c),  3.02,
3.03, 3.04, 3.05 and 3.06 of the Indenture.


                                    ARTICLE 4
                                  MISCELLANEOUS


SECTION 4.01 Confirmation of Indenture.

     As amended  and  supplemented  by this First  Supplemental  Indenture,  the
Indenture is in all respects  ratified and  confirmed and the Indenture and this
First  Supplemental  Indenture shall be read, taken and construed as one and the
same instrument.

SECTION 4.02 Notices.

     Any notice or communication  shall be in writing and delivered in person or
mailed by first-class mail, postage prepaid, addressed as follows:

          if to the Company:

                      Public Service Electric and Gas Company
                      80 Park Plaza, T6B
                      P.O. Box 570
                      Newark, New Jersey  07101
                      Attention:  Treasurer

<PAGE>
          if to the Trustee:

                      First Fidelity Bank, National Association
                      765 Broad Street
                      Newark, New Jersey  07101
                      Attention:  Corporate Trust Department
                        
     The Company or the Trustee,  by giving  notice to the other,  may designate
additional or different addresses for subsequent notices of communications.  The
Company  shall  notify the holder,  if any, of Senior  Indebtedness  of any such
additional or different  addresses of which the Company receives notice from the
Trustee.

     Any  notice or  communication  given to a  Debentureholder  other  than the
Partnership  shall be mailed  to the  Debentureholder  at the  Debentureholder's
address as it appears on the Register of the Registrar and shall be sufficiently
given if mailed within the time prescribed.

     Failure  to mail a notice  or  communication  to a  Debentureholder  or any
defect  in  it  shall  not  affect  its   sufficiency   with  respect  to  other
Debentureholders.  If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not received by the addressee.

     If the Company mails a notice or communication to the Debentureholders,  it
shall  mail  a  copy  to  the  Trustee  and  each  Registrar,  Paying  Agent  or
co-Registrar.

SECTION 4.03 Severability Clause.

     If any provision in this  Indenture or in the Series B Debentures  shall be
invalid, illegal or unenforceable,  the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

SECTION 4.04 No Recourse Against Others.

     No director,  officer,  employee or  stockholder,  as such,  of the Company
shall have any liability for any  obligations  of the Company under the Series B
Debentures  or this First  Supplemental  Indenture or for any claim based on, in
respect of or by reason of such  obligations or their  creation.  By accepting a
Series B  Debenture,  each  Debentureholder  shall  waive and  release  all such
liability.  The waiver and release  shall be part of the  consideration  for the
issue of the Series B Debentures.

SECTION 4.05 Successors.

     All agreements of the Company in this First Supplemental  Indenture and the
Series B Debentures shall bind its successors and assigns. All agreements of the
Trustee in this First  Supplemental  Indenture  shall  bind its  successors  and
assigns.
<PAGE>

SECTION 4.06 Multiple Original Copies of this Indenture.

     The  parties  may sign any  number  of copies  of this  First  Supplemental
Indenture.  Each  signed  copy shall be an  original,  but all of them  together
represent the same agreement.  Any signed copy shall be sufficient proof of this
First Supplemental Indenture.

SECTION 4.07 Table of Contents; Headings, Etc.

     The Table of Contents,  Cross-Reference Table, and headings of the Articles
and  Sections  of this  First  Supplemental  Indenture  have been  inserted  for
convenience of reference only, are not to be considered a part hereof, and shall
in no way modify or restrict any of the terms or provisions hereof.

                                   SIGNATURES


                        IN  WITNESS  WHEREOF,   the   undersigned,   being  duly
authorized, have executed this First Supplemental Indenture on behalf of the
respective parties hereto as of the date first above written.

                     PUBLIC SERVICE ELECTRIC AND GAS COMPANY

                       By:    FRANCIS J. RIEPL
                              ----------------               
                       Name:  Francis J. Riepl

                       Title: Vice President and Treasurer

                       FIRST FIDELITY BANK, NATIONAL ASSOCIATION, as Trustee

                       By:    MELISSA MATTHEWS
                              ----------------
                       Name:  Melissa Matthews
                       
                       Title: Vice President


Public Service Electric and Gas Capital, L.P.

By:   Public Service Electric and Gas Company,
      its sole general partner


By:    FRANCIS J. RIEPL
       ----------------               
Name:  Francis J. Riepl
Title: Vice President and Treasurer



Solely for the purposes stated in the recitals hereto.


<PAGE>





                                    Exhibit A

                     PUBLIC SERVICE ELECTRIC AND GAS COMPANY

                 8% Deferrable Interest Subordinated Debenture,
                                    Series B

No. 1


     Public  Service  Electric and Gas Company,  a New Jersey  corporation  (the
"Company",  which term  includes any successor  corporation  under the Indenture
hereinafter  referred to), for value received,  hereby promises to pay to Public
Service Electric and Gas Capital,  L.P. or registered assigns, the principal sum
of Sixty-one Million Eight Hundred  Fifty-Five  Thousand and Six Hundred Seventy
Dollars  ($61,855,670) on September 15, 2044, and to pay interest on said
principal sum from September 15, 1995 or from the most recent  Interest  Payment
Date (as defined  below) to which  interest has been paid or duly  provided for,
monthly  in  arrears  on the  last  day of each  calendar  month  of  each  year
commencing  September 30, 1995 (each, an "Interest Payment Date") at the rate of
8% per annum plus Additional Interest,  if any, until the principal hereof shall
have become due and  payable,  and on any overdue  principal  and (to the extent
that  payment of such  interest  is  enforceable  under  applicable  law) on any
overdue  installment  of  interest  at the same rate per  annum.  The  amount of
interest  payable on any Interest Payment Date shall be computed on the basis of
a 360-day year of twelve 30-day months.  In the event that any Interest  Payment
Date is not a Business Day, then interest will be payable on the next succeeding
day which is a  Business  Day (and  without  any  interest  or other  payment in
respect of any such  delay),  except that,  if such  Business Day is in the next
succeeding  calendar  year,  such  payment  shall  be  made  on the  immediately
preceding  Business  Day, in each case with the same force and effect as if made
on such date. The interest  installment so payable,  and punctually paid or duly
provided for, on any Interest  Payment Date will, as provided in the  Indenture,
be paid to the person in whose name this Debenture is registered at the close of
business on the Regular Record Date for such interest  installment,  which shall
be the 15th day of each month,  provided  that if all of the Series B Debentures
(as defined  below) are then held by the  Partnership or the Series B Debentures
are held in book-entry-only  form, the Regular Record Date shall be the close of
business on the Business Day next preceding such Interest Payment Date. Any such
interest  installment  not punctually  paid or duly provided for shall forthwith
cease to be payable to the Holders on such Regular  Record Date, and may be paid
to the  person  in whose  name  this  Debenture  is  registered  at the close of
business on a Special  Record Date to be fixed by the Trustee (as defined below)
for the payment of such defaulted interest, notice whereof shall be given to the
Holders of the Series B  Debentures  not less than 7 days prior to such  Special
Record Date, as more fully provided in the Indenture.
<PAGE>
     Payment of the principal of and interest on this  Debenture will be made in
such coin or currency of the United  States of America as at the time of payment
is legal tender for payment of public and private debts. Payments of interest on
an Interest  Payment Date will be made by check  mailed to the Holder  hereof at
the address  shown in the  Register or, at the option of the Holder  hereof,  to
such  other  place in the  United  States  of  America  as Holder  hereof  shall
designate  to the  Trustee in  writing.  At the  request of a Holder of at least
$10,000,000 aggregate principal amount of Series B Debentures,  interest on such
Debentures will be payable by wire transfer within the continental United States
in immediately  available funds to the bank account number  specified in writing
by such holder to the Registrar prior to the Regular Record Date.

     The principal amount hereof and interest due on the Stated Maturity Date or
a Redemption  Date (other than an Interest  Payment Date) will be paid only upon
surrender of this  Debenture at the  principal  corporate  trust office of First
Fidelity Bank, National Association,  Paying Agent, in Newark, New Jersey, or at
such other office or agency of the Paying Agent as the Company  shall  designate
by written notice to the Holder of this Debenture.

     The indebtedness  evidenced by this Debenture is, to the extent provided in
the Indenture,  subordinate and subject in right of payment to the prior payment
in full of all Senior Indebtedness,  and this Debenture is issued subject to the
provisions of the Indenture with respect thereto.  The Holder of this Debenture,
by accepting the same, (a) agrees to and shall be bound by such provisions,  (b)
authorizes  and  directs the Trustee on his behalf to take such action as may be
necessary or  appropriate to  acknowledge  or effectuate  the  subordination  so
provided and (c) appoints the Trustee his  attorney-in-fact for any and all such
purposes.  The Holder hereof, by his acceptance hereof, hereby waives all notice
of the acceptance of the  subordination  provisions  contained herein and in the
Indenture  by each holder of Senior  Indebtedness,  whether now  outstanding  or
hereafter  incurred,   and  waives  reliance  by  each  such  Holder  upon  said
provisions.

     This  Debenture is one of a duly  authorized  series of  Debentures  of the
Company (herein sometimes  referred to as the "Series B Debentures"),  specified
in the Indenture,  limited in aggregate  principal amount to $61,855,670  issued
under and  pursuant to an  Indenture  dated as of November 1, 1994  executed and
delivered between the Company and First Fidelity Bank, National Association,  as
trustee (the  "Trustee"),  as supplemented by the First  Supplemental  Indenture
dated as of  September  1,  1995  between  the  Company  and the  Trustee  (said
Indenture as so supplemented being hereinafter  referred to as the "Indenture").

<PAGE>

Reference is made to the Indenture and all indentures supplemental thereto for a
description  of the  rights,  limitations  of  rights,  obligations,  duties and
immunities  thereunder  of the  Trustee,  the  Company  and the  Holders  of the
Debentures.  By  the  terms  of  the  Indenture,  subordinated  debentures  (the
"Debentures")  are  issuable  in  series  which may vary as to  amount,  date of
maturity, rate of interest and in other respects as in the Indenture provided.

     The Series B  Debentures  are  subject  to  mandatory  redemption  prior to
maturity at 100% of the principal  amount  thereof plus accrued  interest to the
Redemption Date as follows:

                        (i)         in whole upon the dissolution and winding up
                                    of the  Partnership,  unless,  in connection
                                    with such  dissolution  and  winding up, the
                                    Series B Debentures  are  distributed to the
                                    holders of the 8% Cumulative  Monthly Income
                                    Preferred Securities,  Series B (the "Series
                                    B Preferred  Securities") in accordance with
                                    the terms thereof; and

                        (ii)        in whole or in part upon a redemption of the
                                    Series  B  Preferred  Securities,  but if in
                                    part, in an aggregate principal amount equal
                                    to   the   aggregate   stated    liquidation
                                    preference   of  the   Series  B   Preferred
                                    Securities redeemed.

     At the option of the Company,  the Series B Debentures are redeemable prior
to maturity  (i) at any time after the  Company is  required  to pay  Additional
Interest on the Series B Debentures, in whole or in part, (ii) at any time on or
after  September 15, 2000,  in whole or in part,  and (iii) if a Tax Event shall
occur and be continuing, in whole (but not in part), in each case at 100% of the
principal  amount  thereof plus accrued  interest to the Redemption  Date.  "Tax
Event" shall mean that the Partnership shall have received an opinion of counsel
(which  may be  regular  counsel  to the  Company  or an  Affiliate,  but not an
employee thereof) experienced in such matters to the effect that, as a result of
any amendment to, or change (including any announced prospective change) in, the
laws (or any  regulations  thereunder)  of the  United  States or any  political
subdivision or taxing authority thereof or therein affecting  taxation,  or as a
result  of  any  official  administrative  pronouncement  or  judicial  decision
interpreting or applying such laws or regulations,  which amendment or change is
effective or such  interpretation  or pronouncement is announced on or after the
date of original  issuance of the Series B Preferred  Securities,  there is more
than an insubstantial  risk that (i) the Partnership is subject to United States
Federal  income tax with respect to interest  received on the Debentures or (ii)
interest payable by the Company to the Partnership on the Debentures will not be
deductible for United States Federal income tax purposes or the Partnership will
otherwise not be taxed as a partnership  or (iii) the  Partnership is subject to
more than a de  minimis  amount of other  taxes,  duties,  assessments  or other
governmental charges.
<PAGE>

     At least 30 days but not more than 60 days before the Redemption  Date, the
Trustee shall mail or caused to be mailed a notice of redemption by  first-class
mail, postage prepaid, to each Holder of Debentures to be redeemed.

     In the event of redemption  of this  Debenture in part only, a new Series B
Debenture or Debentures for the unredeemed  portion hereof will be issued in the
name of the Holder hereof upon the cancellation hereof.

     In case an Event of  Default,  as  defined  in the  Indenture,  shall  have
occurred  and  be  continuing,  the  principal  of  and  interest  on all of the
Debentures  may be declared,  and upon such  declaration  shall become,  due and
payable,  in the manner,  with the effect and subject to the conditions provided
in the Indenture.

     The Indenture contains  provisions for defeasance at any time of the entire
indebtedness  of this  Debenture  upon  compliance  by the Company  with certain
conditions set forth therein.

     Subject to certain exceptions in the Indenture which require the consent of
every  Holder,  the  Company  and the  Trustee  may amend the  Indenture  or the
Debentures  issued thereunder or may waive future compliance by the Company with
any provisions of the Indenture or the Debentures  issued  thereunder (i) if the
Partnership is the sole Holder of the  Debentures  issued  thereunder,  with the
written consent of the Special  Representative or, if no Special  Representative
has been appointed, the Partnership,  at the direction of the holders of 66 2/3%
of the aggregate stated  liquidation  preference of the Preferred  Securities at
the time  outstanding,  or (ii) if the Partnership is not the sole Holder of the
Debentures,  with the  consent of the  Holders of at least 66 2/3% in  aggregate
principal  amount  of the  Debentures  issued  under the  Indenture  at the time
outstanding. Subject to certain exceptions in the Indenture, without the consent
of any Holder of the Debentures issued under the Indenture,  the Company and the
Trustee may amend the Indenture or the Debentures to cure any ambiguity,  defect
or  inconsistency,  to bind a successor to the obligations of the Indenture,  to
provide for uncertificated Debentures in addition to certificated Debentures, to
comply with any  requirements  of the Debentures and the Securities and Exchange
Commission in connection with the  qualification of the Indenture under the TIA,
or to make any change that, in the reasonable judgment of the Company,  does not
adversely affect the rights of any Holder of the Debentures. Amendments bind all
Holders and subsequent Holders of Debentures.



<PAGE>
     No reference  herein to the Indenture and no provision of this Debenture or
the  Indenture  shall alter or impair the  obligation  of the Company,  which is
absolute  and  unconditional,  to pay  the  principal  of and  interest  on this
Debenture  at the  time  and  place  and at the  rate  and in the  money  herein
prescribed.

     So long as an Event of Default  has not  occurred  and is  continuing,  the
Company  shall  have the right at any time and from  time to time to extend  the
interest payment period of the Debentures issued under the Indenture,  including
the Series B Debentures,  to up to 60 consecutive months (the "Extended Interest
Payment Period"), provided that no Extended Interest Payment Period shall extend
beyond the Stated Maturity Date or Redemption Date of any Debenture issued under
the Indenture.  At the end of the Extended Interest Payment Period,  the Company
shall pay all interest then accrued and unpaid  (together with interest  thereon
at the respective  rates  specified for the  Debentures,  including the Series B
Debentures,  to the extent that payment of such  interest is  enforceable  under
applicable law). During such Extended  Interest Payment Period,  the Company may
not  declare  or pay  any  dividend  on,  redeem,  purchase,  acquire  or make a
liquidation  payment  with  respect to, any of its capital  stock.  Prior to the
termination  of any such  Extended  Interest  Payment  Period,  the  Company may
further  extend  such  Extended  Interest  Payment  Period,  provided  that such
Extended  Interest  Payment  Period  together with all such previous and further
extensions thereof shall not exceed 60 consecutive months. At the termination of
any such Extended  Interest  Payment  Period and upon the payment of all amounts
then due, the Company may select a new Extended Interest Payment Period, subject
to the foregoing restrictions.

     Series B Debentures are issuable only in registered form without coupons in
denominations  of $25 and any  integral  multiple  thereof.  As  provided in the
Indenture and subject to certain  limitations  therein set forth, this Debenture
is exchangeable for a like aggregate  principal amount of Series B Debentures of
a different authorized denomination, as requested by the Holder surrendering the
same.

     As provided in the Indenture and subject to certain limitations therein set
forth,  this  Debenture is  transferable  by the Holder hereof upon surrender of
this  Debenture  for  registration  of  transfer  at the office or agency of the
Registrar accompanied by a written instrument or instruments of transfer in form
satisfactory to the Registrar duly executed by the Holder hereof or his attorney
duly authorized in writing, and thereupon one or more new Series B Debentures of
authorized  denominations  and for the same aggregate  principal  amount will be
issued to the designated  transferee or  transferees.  No service charge will be
made for any  such  transfer,  but the  Company  may  require  payment  of a sum
sufficient  to cover any tax or other  governmental  charge  payable in relation
thereto.

<PAGE>
     Prior to presentment for  registration  of transfer of this Debenture,  the
Company,  the Trustee, any Paying Agent and any Registrar may deem and treat the
Holder hereof as the absolute owner hereof  (whether or not this Debenture shall
be overdue and notwithstanding any notice of ownership or writing hereon made by
anyone other than the Registrar)  for the purpose of receiving  payment of or on
account  of the  principal  hereof  and  interest  due  hereon and for all other
purposes,  and neither the Company nor the Trustee nor any Paying  Agent nor any
Registrar shall be affected by any notice to the contrary.

     No  recourse  shall  be had  for the  payment  of the  principal  of or the
interest on this  Debenture,  or for any claim based  hereon,  or  otherwise  in
respect  hereof,  or  based  on or in  respect  of the  Indenture,  against  any
incorporator,  stockholder,  officer or director,  past,  present or future,  as
such, of the Company or of any predecessor or successor corporation,  whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise,  all such liability being, by the acceptance
hereof  and as part of the  consideration  for the  issuance  hereof,  expressly
waived and released.

     Each term used in this Debenture  which is defined in the Indenture and not
defined herein shall have the meaning assigned to it in the Indenture.

     This  Debenture  shall not be valid until an  authorized  signatory  of the
Trustee  manually signs and dates the Trustee's  Certificate  of  Authentication
below.

     IN WITNESS  WHEREOF,  the Company has caused  this  Debenture  to be signed
manually or by  facsimile  by a duly  authorized  officer and a facsimile of its
corporate seal to be affixed hereto or imprinted hereon.


                     PUBLIC SERVICE ELECTRIC AND GAS COMPANY


                         By:       FRANK J. RIEPL
                                   --------------
[SEAL]                   Name:     Franci J. Riepl
                         Title:    Vice President and Treasurer

Attest:

R.S. SMITH
----------------------
Assistant Secretary


Dated: September 15, 1995


<PAGE>


                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION


     This is one of the  Debentures of the series of  Debentures  referred to in
the within-mentioned First Supplemental Indenture.

FIRST FIDELITY BANK, NATIONAL ASSOCIATION, as Trustee

By: MELISSA MATTHEWS
    -----------------
Name: Melissa Matthews



     Authorized Signatory





<PAGE>

                                 ASSIGNMENT FORM


     To assign this  Debenture,  fill in the form below:  (I) or (we) assign and
transfer this Debenture to:

---------------------------------------------------------------
  (Insert assignee's social security or tax I.D. number)

----------------------------------------------------------------
  (Print or type assignee's name, address and zip code)

and irrevocably  appoint  ______________________________  agent to transfer
this Debenture on the books of the Debenture Register.  The agent may substitute
another to act for him.


Dated:  ________________            Signature: ________________________
                                               (Sign exactly as your name
                                               appears on the other side of
                                               this Debenture)

Signature Guaranty: ________________________