EXHIBIT 12

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

                                                        -------------------
                                                        For the Nine Months
                                                        Ended September 30,
                                                        -------------------
                                                           2002      2001
                                                        ---------  --------

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

Pre-tax Income from Continuing Operations                $   204   $   292
Fixed Charges                                                317       370
Preferred Securities Dividend Requirements                   (10)      (22)
Capitalized Interest                                          (1)       (2)
                                                         -------   -------
Earnings                                                 $   510   $   638
                                                         =======   =======

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

Interest Expense                                         $   307   $   346
Interest Factor in Rentals                                     0         2
Preferred Securities Dividend Requirements                    10        22
                                                         =======   =======
Total Fixed Charges                                      $   317   $   370
                                                         =======   =======

Ratio of Earnings to Fixed Charges                          1.61      1.72
                                                         =======   =======

(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 the amount of any interest capitalized during the period.

(B)   Fixed Charges represent (a) interest, whether expensed or capitalized, (b)
      amortization of debt discount,  premium and expense and (c) an estimate of
      interest implicit in rentals.