EXHIBIT 12 (B)
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<CAPTION>

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                                          PUBLIC SERVICE ELECTRIC AND GAS COMPANY
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                                     COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
                                         PLUS PREFERRED STOCK DIVIDEND REQUIREMENTS


                                                                                                                  12 Months
                                                                                                                    Ended
                                                                YEARS ENDED DECEMBER 31,                          September
                                                                                                                     30,
                                         ------------  -------------  ------------  ------------  -------------  ------------
                                             1994           1995           1996          1997          1998          1999
                                         ------------  -------------  ------------  ------------  -------------  ------------
<S>                                             <C>            <C>           <C>           <C>            <C>           <C>
Earnings as Defined in Regulation
  S-K (A):
Net Income (B)                                  $659           $617          $535          $528           $604          $652
Income Taxes (C)                                 302            326           268           286            406           443
Fixed Charges                                    408            419           438           450            446           450
                                         ------------  -------------  ------------  ------------  -------------  ------------
Earnings                                      $1,369         $1,362        $1,241        $1,264         $1,456        $1,545
                                         ============  =============  ============  ============  =============  ============

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

Total Interest Expense                          $396           $407          $399          $395           $390          $393
Interest Factor in Rentals                        12             12            11            11             11            10
Subsidiaries' Preferred Securities
    Dividend Requirements                         --             --            28            44             45            47
Preferred Stock Dividends                         42             49            23            12              9             9
Adjustment to Preferred Stock
    Dividends to state on a pre-income
    tax basis                                     19             24            12             6              6             7
                                         ------------  -------------  ------------  ------------  -------------  ------------
Total Fixed Charges                             $469           $492          $473          $468           $461          $466
                                         ============  =============  ============  ============  =============  ============

Ratio of Earnings to Fixed Charges              2.92           2.77          2.62          2.70           3.15          3.32
                                         ============  =============  ============  ============  =============  ============
<FN>
(A)  The term  "earnings"  shall be defined as pre-tax  income  from  continuing
     operations.  Add to pre-tax 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 pre-tax income.

(B)  Excludes extraordinary item.

(C)  Includes  State income taxes and Federal  income taxes for other income and
     excludes taxes applicable to extraordinary item.

(D)  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.
</FN>
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