<PAGE>   

<TABLE>
<CAPTION>
 
                                                                           EXHIBIT 12(B)
 
                    PUBLIC SERVICE ELECTRIC AND GAS COMPANY
 
               COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
                 PLUS PREFERRED SECURITIES DIVIDEND REQUIREMENTS
                                                                                                       12 Months
                                                          YEARS ENDED DECEMBER 31,                       Ended
                                       ------------------------------------------------------------- September 30,
                                          1990         1991         1992        1993         1994        1995
                                       ----------   ----------   ----------  ----------   ----------   ---------
                                                                   (THOUSANDS OF DOLLARS)
<S>                                    <C>          <C>         <C>         <C>           <C>          <C>
Net Income............................ $  537,619   $  545,479  $  475,936   $  614,868   $  659,406   $  622,550
Plus Income Taxes (A).................    209,361      261,912     223,782      307,414      301,447      289,959
                                       ----------   ----------   ---------   ----------   ----------   ----------
Income Before Income Taxes............    746,980      807,391     699,718      922,282      960,853      912,509
                                       ----------   ----------   ---------   ----------   ----------   ----------
Fixed Charges and Preferred Securities
  Dividend Requirements:
  Interest Charges (B)................    346,020      358,517     401,902      389,956      395,925      410,831
  Interest Factor in Rentals..........      9,162        9,311       9,591       11,090       12,120       12,057
  Preferred Securities Dividend
    Requirements (Pre-tax) (C)........     40,116       42,703      46,675       56,957       60,910       68,226
                                       ----------   ----------   ---------   ----------   ----------   ----------
          Total.......................    395,298      410,531     458,168      458,003      468,955      491,114
                                       ----------   ----------   ---------   ----------   ----------   ----------
Earnings Before Fixed Charges and
  Preferred Securities Dividend
  Requirements........................ $1,102,162   $1,175,219  $1,111,211   $1,323,328   $1,368,898   $1,335,397
                                       ==========   ==========  ==========   ==========   ==========   ==========

Ratio.................................       2.79         2.86        2.43         2.89         2.92         2.72
                                             ====         ====        ====         ====         ====         ====

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

(B)  Excludes 1991 and 1992 interest expense on decommissioning costs of $6,956 and $5,208, respectively.
     Effective January 1, 1992, accounting was changed to follow Federal Energy Regulatory Commission 
     guidelines.

(C)  Includes a reduction for tax-deductible preferred dividends in accordance with Sections 244(a) and 
     11(b) of the Internal Revenue Code of 1986, as amended, before applying accounting Rule S-K of 
     Regulation 229.503,  Item 503 (d)(6).  
</TABLE>