EXHIBIT 12

               PUBLIC SERVICE ELECTRIC AND GAS COMPANY
          COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES



                                           -------------------------
                                              For the Nine Months
                                              Ended September 30,
                                           -------------------------
                                               2001         2000
                                           -----------  ------------

Earnings as Defined in
  Regulation S-K (A):

Net Income                                       $208          $501
Income Taxes                                       84           333
Fixed Charges                                     359           336
                                           -----------  ------------
Earnings                                         $651        $1,170
                                           ===========  ============

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

Total Interest Expense                           $329          $294
Interest Factor in Rentals                          8             8
Subsidiaries' Preferred Securities
    Dividend Requirements                          22            34
                                           -----------  ------------
Total Fixed Charges                              $359          $336
                                           ===========  ============

Ratio of Earnings to Fixed Charges               1.81          3.48
                                           ===========  ============


(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)  Fixed  Charges  represent (a) interest,  whether  expensed or  capitalized,
     (including  interest  on  the  $2.525  billion  of  securitized  debt)  (b)
     amortization  of debt  discount,  premium and  expense,  (c) an estimate of
     interest  implicit  in  rentals,  and  (d)  Preferred  Securities  Dividend
     Requirements of subsidiaries.

<PAGE>

                                                                   EXHIBIT 12(A)

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


                                           -------------------------
                                             For the Nine Months
                                             Ended September 30,
                                           -------------------------
                                              2001         2000
                                           -----------  ------------

Earnings as Defined in
  Regulation S-K (A):

Net Income                                       $208          $501
Income Taxes                                       84           333
Fixed Charges                                     359           336
                                           -----------  ------------
Earnings                                         $651        $1,170
                                           ===========  ============

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

Total Interest Expense                           $329          $294
Interest Factor in Rentals                          8             8
Subsidiaries' Preferred Securities
    Dividend Requirements                          22            34
Preferred Stock Dividends                           4             7
Adjustment to Preferred Stock Dividends
   to state on a pre-income tax basis               3             5
                                           -----------  ------------
Total Fixed Charges                              $366          $348
                                           ===========  ============

Ratio of Earnings to Fixed Charges               1.78          3.36
                                           ===========  ============


(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)  Fixed  Charges  represent (a) interest,  whether  expensed or  capitalized,
     (including  interest  on  the  $2.525  billion  of  securitized  debt)  (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.