EXHIBIT 12 (B)
                     PUBLIC SERVICE ELECTRIC AND GAS COMPANY
                     ---------------------------------------
               COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
                   PLUS PREFERRED STOCK DIVIDEND REQUIREMENTS

 
                                                                 12 Months
                                                                   Ended
                                 YEARS ENDED DECEMBER 31,         June 30,
                         ------- -------  ------- ------- -------
                         1993      1994     1995    1996    1997    1998
                         ------- -------  ------- ------- -------  -----        
                              (Millions of Dollars, where applicable)
Earnings as Defined in
Regulation S-K (A):

Net Income                  $615    $659    $617    $535    $528     $570
Income Taxes (B)             307     302     326     268     286      364
Fixed Charges                401     408     419     438     450      441
                          ------- ------- ------- ------- -------  -------
Earnings                  $1,323  $1,369  $1,362  $1,241  $1,264   $1,375
                          ======= ======= ======= ======= =======  =======

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

Total Interest Expense      $390    $396    $407    $399    $395     $386
Interest Factor in            
  Rentals                     11      12      12      11      11       11
Subsidiaries' Preferred
  Securities Dividend                   
  Requirements                --      --      --      28      44       44
Preferred Stock Dividends     38      42      49      23      12        9
Adjustment to Preferred
  Stock Dividends to 
  state on a pre-income
  tax basis                   19      19      24      12       6        7
                          ------- ------- ------- ------- -------  -------
Total Fixed Charges         $458    $469    $492    $473    $468     $457
                          ======= ======= ======= ======= =======  =======
Ratio of Earnings to       
  Fixed Charges             2.89    2.92    2.77    2.62    2.70     3.00
                          ======= ======= ======= ======= =======  =======

(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.