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, March 31,
------------ ------------- ------------ ------------ ------------- ------------
1994 1995 1996 1997 1998 1999
------------ ------------- ------------ ------------ ------------- ------------
Earnings as Defined in Regulation
S-K (A):
Net Income $659 $617 $535 $528 $604 $616
Income Taxes (B) 302 326 268 286 406 421
Fixed Charges 408 419 438 450 446 443
------------ ------------- ------------ ------------ ------------ ------------
Earnings $1,369 $1,362 $1,241 $1,264 $1,456 $1,480
============ ============= ============ ============ ============= ============
Fixed Charges as Defined in
Regulation S-K (C):
Total Interest Expense $396 $407 $399 $395 $390 $387
Interest Factor in Rentals 12 12 11 11 11 11
Subsidiaries' Preferred Securities
Dividend Requirements -- -- 28 44 45 45
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 $459
============ ============= ============ ============ ============= ============
Ratio of Earnings to Fixed Charges 2.92 2.77 2.62 2.70 3.15 3.22
============ ============= ============ ============ ============= ============
(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.
