<PAGE 1>


               UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                         Washington, D. C. 20549-1004

                                   Form 10-Q

(Mark One)
[ X ]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934

       For the quarterly period ended June 30, 1998

                                      OR

[   ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
       EXCHANGE ACT OF 1934

       For the transition period from _______________ to _______________

                         Commission file number 2-7909

                       CAMBRIDGE ELECTRIC LIGHT COMPANY          
            (Exact name of registrant as specified in its charter)

         Massachusetts                                    04-1144610    
(State or other jurisdiction of                        (I.R.S. Employer
incorporation or organization)                        Identification No.)

One Main Street, Cambridge, Massachusetts                 02142-9150
(Address of principal executive offices)                  (Zip Code)

                                (617) 225-4000                  
             (Registrant's telephone number, including area code)

                                                                       
  (Former name, address and fiscal year, if changed since last report.)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.  YES [ x ]  NO [   ]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

                                               Outstanding at
           Class of Common Stock               August 1, 1998
        Common Stock, $25 par value            346,600 shares

The Company meets the conditions set forth in General Instruction H(1)(a) and
(b) of Form 10-Q as a wholly-owned subsidiary and is therefore filing this
Form with the reduced disclosure format.
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                        PART I - FINANCIAL INFORMATION


Item 1.  Financial Statements


                       CAMBRIDGE ELECTRIC LIGHT COMPANY

                           CONDENSED BALANCE SHEETS

                      JUNE 30, 1998 AND DECEMBER 31, 1997

                                    ASSETS

                            (Dollars in thousands)



                                                    June 30,     December 31,
                                                     1998            1997    
                                                  (Unaudited)

PROPERTY, PLANT AND EQUIPMENT, at original cost    $165,546        $163,914
  Less - Accumulated depreciation                    68,356          63,706
                                                     97,190         100,208
  Add - Construction work in progress                 2,244             757
                                                     99,434         100,965

INVESTMENTS
  Equity in nuclear electric power companies         10,375           9,849
  Other                                                   5               5
                                                     10,380           9,854

CURRENT ASSETS
  Cash                                                  468             521
  Accounts receivable
    Affiliates                                        2,829           2,743
    Customers                                        12,051          12,483
  Unbilled revenues                                   1,085           3,047
  Prepaid taxes -
    Income                                              746           1,192
    Property                                              -           1,697
  Inventories and other                               2,122           1,977
                                                     19,301          23,660

DEFERRED CHARGES
  Regulatory assets                                  72,126          70,466
  Other                                               3,165           2,176
                                                     75,291          72,642

                                                   $204,406        $207,121





                            See accompanying notes.
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                       CAMBRIDGE ELECTRIC LIGHT COMPANY

                           CONDENSED BALANCE SHEETS

                      JUNE 30, 1998 AND DECEMBER 31, 1997

                        CAPITALIZATION AND LIABILITIES

                            (Dollars in thousands)


                                                    June 30,     December 31,
                                                      1998           1997    
                                                  (Unaudited)
CAPITALIZATION
  Common Equity -
    Common stock, $25 par value -
      Authorized and outstanding -
        346,600 shares, wholly-owned by
        Commonwealth Energy System (Parent)        $  8,665        $  8,665
    Amounts paid in excess of par value              27,953          27,953
    Retained earnings                                12,372          11,607
                                                     48,990          48,225
  Long-term debt, including premiums, less
    maturing debt and current sinking fund
    requirements                                      7,302          17,402
                                                     56,292          65,627
CURRENT LIABILITIES
  Interim Financing -
    Notes payable to banks                           29,750          19,000
    Advances from affiliates                          1,535          11,290
    Maturing long-term debt                          10,000             -  
                                                     41,285          30,290

  Other Current Liabilities -
    Current sinking fund requirements                   100             100
    Accounts payable
      Affiliates                                      3,921           4,144
      Other                                           7,545           8,076
    Accrued local property and other taxes               22           1,706
    Accrued interest                                    430             460
    Other                                             6,465           3,830
                                                     18,483          18,316
                                                     59,768          48,606
DEFERRED CREDITS
  Accumulated deferred income taxes                  15,399          15,135
  Purchased power contracts                          61,695          66,223
  Unamortized investment tax credits and other       11,252          11,530
                                                     88,346          92,888

COMMITMENTS AND CONTINGENCIES

                                                   $204,406        $207,121



                            See accompanying notes.
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                       CAMBRIDGE ELECTRIC LIGHT COMPANY

             CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS

           FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997

                            (Dollars in thousands)
                                  (Unaudited)



                                    Three Months Ended     Six Months Ended
                                      1998      1997        1998      1997

ELECTRIC OPERATING REVENUES          $27,155   $30,048     $54,726   $63,113

OPERATING EXPENSES
  Electricity purchased for resale,
    transmission and fuel             15,755    19,655      30,781    42,862
  Other operation and maintenance      6,272     8,548      11,400    14,611
  Depreciation                         2,129     1,119       3,630     2,238
  Taxes -
    Income                               940      (283)      2,781       136
    Local property                       760       757       1,525     1,534
    Payroll and other                    181       202         384       464
                                      26,037    29,998      50,501    61,845

OPERATING INCOME                       1,118        50       4,225     1,268

OTHER INCOME                             344       587         749     1,025

INCOME BEFORE INTEREST CHARGES         1,462       637       4,974     2,293

INTEREST CHARGES
  Long-term debt                         361       407         722       837
  Other interest charges                 446       477         888       854
                                         807       884       1,610     1,691

NET INCOME                               655      (247)      3,364       602

RETAINED EARNINGS -
  Beginning of period                 14,316    10,082      11,607     9,233
  Dividends on common stock           (2,599)     (589)     (2,599)     (589)

RETAINED EARNINGS -
  End of period                      $12,372   $ 9,246     $12,372   $ 9,246








                            See accompanying notes.
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                       CAMBRIDGE ELECTRIC LIGHT COMPANY

                      CONDENSED STATEMENTS OF CASH FLOWS

                FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997

                            (Dollars in thousands)
                                  (Unaudited)



                                                         1998        1997

CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                           $ 3,364     $   602
  Effects of noncash items -
    Depreciation and amortization                        3,882       2,238
    Deferred income taxes and investment tax
      credits, net                                         392        (808)
    Earnings from corporate joint ventures                (564)       (644)
  Dividends from corporate joint ventures                   38          91
  Change in working capital, exclusive of cash and
    interim financing                                    4,473      (1,164)
  Transition costs deferral                             (6,322)          -
  All other operating items                                161        (180)
Net cash provided by operating activities                5,424         135

CASH FLOWS FOR INVESTING ACTIVITIES
  Additions to property, plant and equipment            (3,773)     (1,886)

CASH FLOWS FROM FINANCING ACTIVITIES
  Payment of dividends                                  (2,599)       (589)
  Proceeds from short-term borrowings                   10,750       8,875
  Payments to affiliates                                (9,755)     (2,200)
  Long-term debt issue refunded                              -      (4,260)
  Sinking funds payments                                  (100)       (100)
Net cash provided by (used for)
  financing activities                                  (1,704)      1,726

Net decrease in cash                                       (53)        (25)
Cash at beginning of period                                521         143
Cash at end of period                                  $   468     $   118


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
  Cash paid during the period for:
    Interest (net of capitalized amounts)              $ 1,552     $ 1,738
    Income taxes                                       $ 1,277     $   883




                            See accompanying notes.
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                       CAMBRIDGE ELECTRIC LIGHT COMPANY

                    NOTES TO CONDENSED FINANCIAL STATEMENTS

(1)   General Information

      Cambridge Electric Light Company (the Company) is a wholly-owned subsid-
  iary of Commonwealth Energy System.  The parent company is referred to in
  this report as the "System" and together with its subsidiaries is collec-
  tively referred to as "the system."  The System is an exempt public utility
  holding company under the provisions of the Public Utility Holding Company
  Act of 1935 and, in addition to its investment in the Company, has interests
  in other utility and several nonregulated companies.

      The Company has 146 regular employees including 110 (75%) represented by
  a collective bargaining unit.  Upon expiration of the existing collective
  bargaining agreement on September 1, 1998, a new agreement, which has
  already been ratified, will become effective through March 1, 2001. 
  Employee relations have generally been satisfactory.

      On May 27, 1998, the System announced that three of its subsidiary
  companies (Commonwealth Electric Company, Canal Electric Company and the
  Company) have selected affiliates of Southern Energy New England, L.L.C., an
  affiliate of The Southern Company, to buy substantially all of their non-
  nuclear electric generating assets in conjunction with electric industry
  restructuring in Massachusetts.

(2)   Significant Accounting Policies

      (a) Principles of Accounting

      The Company's significant accounting policies are described in Note 2 of
  Notes to Financial Statements included in its 1997 Annual Report on
  Form 10-K filed with the Securities and Exchange Commission.  For interim
  reporting purposes, the Company follows these same basic accounting policies
  but considers each interim period as an integral part of an annual period
  and makes allocations of certain expenses to interim periods based upon
  estimates of such expenses for the year.

      The unaudited financial statements for the periods ended June 30, 1998
  and 1997 reflect, in the opinion of the Company, all adjustments (consisting
  of only normal recurring accruals, except for a one-time charge recorded in
  June 1997 as described in Management's Discussion and Analysis of Results of
  Operations)necessary to summarize fairly the results for such periods.  In
  addition, certain prior period amounts are reclassified from time to time to
  conform with the presentation used in the current period's financial
  statements.

      Income tax expense is recorded using the statutory rates in effect
  applied to book income subject to tax recorded in the interim period.

      The results for interim periods are not necessarily indicative of
  results for the entire year because of seasonal variations in the consump-
  tion of energy.
<PAGE>
<PAGE 7>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

      (b) Regulatory Assets and Liabilities

      The Company is regulated as to rates, accounting and other matters by
  various authorities including the Federal Energy Regulatory Commission
  (FERC) and the Massachusetts Department of Telecommunications and Energy
  (DTE).

      Based on the current regulatory framework, the Company accounts for the
  economic effects of regulation in accordance with the provisions of
  Statement of Financial Accounting Standards (SFAS) No. 71, "Accounting for
  the Effects of Certain Types of Regulation."  The Company has established
  various regulatory assets in cases where the DTE and/or the FERC have
  permitted or are expected to permit recovery of specific costs over time. 
  Similarly, the regulatory liabilities established by the Company are
  required to be refunded to customers over time.  In the event the criteria
  for applying SFAS No. 71 are no longer met, the accounting impact would be
  an extraordinary, noncash charge to operations of an amount that could be
  material.  Criteria that give rise to the discontinuance of SFAS No. 71
  include: 1) increasing competition that restricts the Company's ability to
  establish prices to recover specific costs, and 2) a significant change in
  the current manner in which rates are set by regulators from cost-based
  regulation to another form of regulation.  These criteria are reviewed on a
  regular basis to ensure the continuing application of SFAS No. 71 is
  appropriate.  Based on the current evaluation of the various factors and
  conditions that are expected to impact future cost recovery, the Company
  believes that its regulatory assets including those related to generation,
  are probable of future recovery.

      As a result of electric industry restructuring, the Company discontinued
  application of accounting principles applied to its investment in electric
  generation facilities effective March 1, 1998.  The Company will not be
  required to write off any of its generation-related assets, including
  regulatory assets.  These assets will be retained on the Company's Balance
  Sheets because the legislation and DTE's plan for the restructured electric
  industry specifically provide for their recovery through a non-bypassable
  transition charge.

      The principal regulatory assets included in deferred charges were as
  follows:
                                                    June 30,     December 31,
                                                      1998          1997
                                                    (Dollars in thousands)
        Maine Yankee unrecovered plant
            and decommissioning costs               $32,595        $34,908
        Connecticut Yankee unrecovered plant
            and decommissioning costs                26,839         28,566
        Yankee Atomic unrecovered plant
            and decommissioning costs                 2,261          2,749
        Postretirement benefits costs                 3,414          3,596
        Transition costs                              6,329            -
        Other                                           688            647
                                                    $72,126        $70,466

      The regulatory liabilities, reflected in the accompanying Balance Sheets
  and related to deferred income taxes, were $2.9 million and $3 million at
<PAGE>
<PAGE 8>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

  June 30, 1998 and December 31, 1997, respectively.

      In November 1997, the Commonwealth of Massachusetts enacted a comprehen-
  sive electric utility industry restructuring bill.  On November 19, 1997,
  the Company, together with Commonwealth Electric Company (Commonwealth) and
  Canal Electric Company (Canal), filed a restructuring plan with the DTE. 
  The plan, approved by the DTE on February 27, 1998, provides that the
  Company and Commonwealth, beginning March 1, 1998, initiate a ten percent
  rate reduction for all customer classes and allow customers to choose their
  energy supplier.  As part of the plan, the DTE authorized the recovery of
  certain strandable costs and provides that certain future costs may be
  deferred to achieve or maintain the rate reductions that the restructuring
  bill mandates.  The legislation gives the DTE the authority to determine the
  amount of strandable costs that will be eligible for recovery.  Costs that
  will qualify as strandable costs and be eligible for recovery include, but
  are not limited to, certain above market costs associated with generating
  facilities, costs associated with long-term commitments to purchase power at
  above market prices from independent power producers, and regulatory assets
  and associated liabilities related to the generation portion of the electric
  business.

      The cost of transitioning to competition will be mitigated, in part, by
  the sale of the system's non-nuclear generating assets.  The sale is
  expected to be completed by year-end 1998 pending receipt of the necessary
  regulatory approvals.  The net proceeds from the sale of these assets will
  be used to mitigate transition costs.

      The system's ability to recover its transition costs will depend on
  several factors, including the aggregate amount of transition costs the
  system will be allowed to recover and the market price of electricity. 
  Management believes that the system will recover its transition costs.  A
  change in any of the above listed factors or in the current legislation
  could affect the recovery of transition costs and may result in a loss to
  the system.  For additional information relating to industry restructuring,
  see the "Industry Restructuring" section under Management's Discussion and
  Analysis of Results of Operations.

(2)   Commitments and Contingencies

      (a) Construction Program

      The Company is engaged in a continuous construction program presently
  estimated at $24.8 million for the five-year period 1998 through 2002.  Of
  that amount, $7 million is estimated for 1998.  As of June 30, 1998 the
  Company's actual construction expenditures amounted to approximately $3.8
  million including an allowance for funds used during construction.  The
  Company expects to finance these expenditures on an interim basis with
  internally-generated funds and short-term borrowings which are ultimately
  expected to be repaid with the proceeds from sales of long-term debt
  securities.

      The program is subject to periodic review and revision because of
  factors such as changes in business conditions, rates of customer growth,
  effects of inflation, maintenance of reliable and safe service, equipment
  delivery schedules, licensing delays, availability and cost of capital and
  environmental regulations.
<PAGE>
<PAGE 9>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

Item 2.     Management's Discussion and Analysis of Results of Operations

    The following is a discussion of certain significant factors which have
affected operating revenues, expenses and net income during the periods
included in the accompanying Condensed Statements of Income.  This discussion
should be read in conjunction with the Notes to Condensed Financial Statements
appearing elsewhere in this report.

    A summary of the period to period changes in the principal items included
in the Condensed Statements of Income for the three and six months ended June
30, 1998 and 1997 and unit sales for these periods is shown below:

                                      Three Months            Six Months
                                     Ended June 30,          Ended June 30,
                                     1998 and 1997           1998 and 1997  
                                              Increase (Decrease)
                                            (Dollars in thousands)

Electric Operating Revenues        $(2,893)    (9.6)%      $(8,387)   (13.3)%

Operating Expenses -
  Electricity purchased for
    resale, transmission and fuel   (3,900)   (19.8)       (12,081)   (28.2)
  Other operation and maintenance   (2,276)   (26.6)        (3,211)   (22.0)
  Depreciation                       1,010     90.3          1,392     62.2
  Taxes -
    Federal and state income         1,223    432.2          2,645  1,944.9
    Local property and other           (18)    (1.9)           (89)    (4.5)
                                    (3,961)   (13.2)       (11,344)   (18.3)

Operating Income                     1 068  2,136.0          2,957    233.2

Other Income                          (243)   (41.4)          (276)   (26.9)

Income Before Interest Charges         825    129.5          2,681    116.9

Interest Charges                       (77)    (8.7)           (81)    (4.8)

Net Income                         $   902    365.2        $ 2,762    458.8


Unit Sales (MWH)
  Retail                            13,222      4.3         18,355      2.9
  Wholesale                         (6,101)   (15.2)       (29,350)   (24.1)
    Total unit sales                 7,121      2.0        (10,995)    (1.5)


      The following is a summary of unit sales for the periods indicated:

                                     Unit Sales (MWH)                      
                         Three Months                    Six Months        
Period Ended      Total   Retail   Wholesale     Total   Retail   Wholesale

June 30, 1998    357,159  323,209    33,950     736,056  643,513    92,543
June 30, 1997    350,038  309,987    40,051     747,051  625,158   121,893
<PAGE>
<PAGE 10>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

Operating Revenues, Electricity Purchased For Resale, Transmission and Fuel

    Operating revenues for the first six months of 1998 decreased
approximately $8.4 million or 13.3% due to decreases in electricity purchased
for resale, fuel ($889,000) and transmission charges ($386,000).  The decrease
in electricity purchased for resale of $10.8 million reflects lower fuel costs
and a $6.3 million deferral of costs in conjunction with the Company's
restructuring plan as approved by the Massachusetts Department of
Telecommunications and Energy (DTE).  The decrease in operating revenues for
the current quarter of $2.9 million or 9.6% reflects a $3.5 million deferral. 
The decrease in operating revenues for both current periods was offset
somewhat by increases in retail unit sales.  As a result of industry
restructuring, the Company has unbundled its rates, provided customers with a
ten percent rate reduction as of March 1, 1998 and has afforded customers the
opportunity to purchase generation supply in the competitive market consistent
with the electric industry restructuring legislation further discussed below. 
Delivery rates are composed of a customer charge (to collect metering and
billing costs), a distribution charge, a transition charge (to collect
stranded costs), a transmission charge, an energy conservation charge (to
collect costs for demand-side management programs) and a renewable energy
charge.  Electricity supply services provided by the Company include optional
standard offer service and default service.  Amounts collected through these
various charges will be reconciled to actual expenditures on an on-going
basis.

    The increase in retail sales for both current periods reflects increases
in sales to commercial and industrial customers, while for both periods the
decrease in wholesale sales was due primarily to a decrease in sales to ISO -
New England (formerly the New England Power Pool).

Operating Expenses

    For the current quarter and first half of 1998, operation and maintenance
decreased $2.3 million (26.6%) and $3.2 million (22%), respectively, due
primarily to the absence of a one-time charge ($2.5 million) related to the
personnel reduction program initiated during the second quarter of 1997.  Also
contributing to the decrease in both the current quarter and first half of
1998 were labor savings realized from the aforementioned personnel reduction
program (approximately $400,000 and $450,000, respectively) and lower
insurance and benefits costs.  Depreciation expense increased reflecting the
treatment allowed for production plant pursuant to the electric industry
restructuring legislation.  The increase in federal and state income taxes was
due to a higher level of pretax income.

Other Income and Interest Charges

    The deceases in other income during the current quarter was primarily due
to a lower rate of return relative to steam production for an affiliated steam
company ($105,000).

    The decrease in interest charges for the current three and six-month
periods reflects lower long-term interest costs ($46,000 and $115,000,
respectively) offset, in part, during the six-month period by an increase in
short-term interest costs ($53,000) that reflects a higher average level of
short-term borrowings.
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<PAGE 11>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

Industry Restructuring

    On November 25, 1997, the Governor of Massachusetts signed into law the
Electric Industry Restructuring Act (the Act).  This legislation provided,
among other things, that customers of retail electric utility companies who
take standard offer service receive a 10 percent rate reduction and be allowed
to choose their energy supplier, effective March 1, 1998.  The Act also
provides that utilities be allowed full recovery of transition costs subject
to review and an audit process.  The rate reduction mandated by the legisla-
tion increases to 15 percent effective September 1, 1999 for customers who
continue to take standard offer service.

    It is likely that a statewide referendum will appear on the ballot in
November of this year that is seeking to repeal the legislation.  Management
is unable to predict what the ultimate outcome of this challenge will be.

    The Company, together with Canal and Commonwealth, filed a comprehensive
electric restructuring plan with the DTE in November 1997, that was
substantially approved by the DTE in February 1998.  The divestiture of the
Company's non-nuclear generation assets and the entitlements associated with
its purchased power contracts is an integral part of the Company's
restructuring plan and is consistent with the Act.  While the Company is
encouraged with the treatment afforded net non-mitigable transition costs
(which, for the Company, are primarily the result of above-market purchased
power contracts with non-utility generators) by the legislation and the DTE,
the mandated rate reduction has had a significant impact on cash flows of the
Company.  However, the successful results of the generation auction, as
discussed below, could significantly reduce the impact that the rate
reductions will have on future cash flows.

    In March 1997, the Company, together with Canal and Commonwealth, had
submitted a report to the DTE that detailed the proposed auction process for
selling their electric generation assets and the entitlements associated with
purchased power contracts.  The auction process provided a market-based
approach to maximizing stranded cost mitigation and minimizing the transition
costs that retail customers will have to pay for stranded cost recovery.  A
request for bids from interested parties was issued last August and an
Offering Memorandum followed in October.  Potential bidders examined all
pertinent information related to the generating facilities and purchased power
contracts in order to prepare and submit their first round of bids in mid-
December.  Final binding bids were submitted on May 8, 1998. 

    On May 27, 1998, the System announced that three of its subsidiary
companies (Commonwealth, Canal and the Company) had selected affiliates of
Southern Energy New England, L.L.C., an affiliate of The Southern Company of
Atlanta, Georgia, to buy substantially all of their non-nuclear electric
generating assets for approximately $462 million (subject to certain
adjustments at closing).  These facilities represent 984 megawatts (mw) of
electric capacity and have an approximate book value of $79 million.

    The plants being sold include: Canal Unit 1 (566 mw) and a one-half
interest in Canal Unit 2 (282.5 mw) located in Sandwich, MA and owned by Canal
Electric; the Kendall Station facility (67 mw) and the adjacent Kendall Jets
(46 mw), located in Cambridge, MA and owned by the Company; five diesel
generators (13.8 mw) in Oak Bluffs and West Tisbury on the island of Martha's
<PAGE>
<PAGE 12>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

Vineyard that are owned by Commonwealth Electric, and a 1.4 percent joint-
ownership interest (8.9 mw) in Wyman Unit No. 4 located in Yarmouth, ME, also
owned by Commonwealth Electric.

    The Company continues to evaluate bids related to the purchased power
contracts.  Also, the Company is evaluating the disposition of the Blackstone
Station generating unit (15.3 mw) located in Cambridge, MA which is subject to
a right of first offer held by Harvard University on any divestiture of the
facility.

    On July 31, 1998, a formal divestiture filing was submitted to the FERC
and the DTE that requests approval of the sale of the Company's generating
assets and further proposes (subject to completion of the sale) that the
current 10 percent rate reduction increase, effective January 1, 1999, to 15.2
percent.  In addition, the Company proposes to increase the retail price of
standard offer service, starting January 1, 1999, from the present rate of 2.8
cents per kilowatthour (kwh) to 3.5 cents.  At the same time that the price
for standard offer service is increased, the transition charge for the
Company's customers will decline from 2.73 cents per kwh to 1.56 cents.  These
proposed changes are intended to further reduce the cost of electricity to
customers, to make the market increasingly more attractive for independent
power suppliers to sell electricity directly to consumers, and to reduce the
Company's cost deferrals associated with the pricing of standard offer
service.  The required approvals of the sale and rate structure are expected
to be received by year-end 1998.

Year 2000

    The Company has been involved in Year 2000 compliancy since 1996.  A
complete inventory and review of software, information processing, delivery
systems and operational components for certain facilities has been completed,
and work continues on computer systems wherever necessary.  While some
computer systems have already been updated, tested and placed in production,
the Company expects to complete the balance of the modifications by mid-1999.

    Costs associated with Year 2000 compliancy are being expensed as incurred. 
The total cost of this project is expected to be funded with internally
generated funds.

    Management believes that with appropriate modifications, the Company will
be fully compliant regarding all Year 2000 issues and will continue to provide
its products and services uninterrupted through the millennium change. 
Failure to become fully compliant could have a significant impact on the
Company's operations.

New Accounting Standard

    In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 (SFAS No. 133), "Accounting for
Derivative Instruments and Hedging Activities."  SFAS No. 133 establishes
accounting and reporting standards requiring that every derivative instrument
(including certain derivative instruments embedded in other contracts possibly
including fixed-price power contracts) be recorded on the balance sheet as
either an asset or liability measured at its fair value.  SFAS No. 133
requires that changes in the derivative's fair value be recognized currently 
<PAGE>
<PAGE 13>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

in earnings unless specific hedge accounting criteria are met.  Special
accounting for qualifying hedges allows a derivative's gains and losses to
offset related results on the hedged item in the income statement, and
requires that a company must formally document, designate and assess the
effectiveness of transactions that receive hedge accounting.

    SFAS No. 133 is effective for fiscal years beginning after June 15, 1999
and may be implemented as of the beginning of any fiscal quarter after
issuance but cannot be applied retroactively.  SFAS No. 133 must be applied to
derivative instruments and certain derivative instruments embedded in hybrid
contracts that were issued, acquired or substantively modified after December
31, 1997 and, at the Company's election, before January 1, 1998.

    The Company has not yet quantified the impacts of adopting SFAS No. 133 on
its financial statements and has not determined the timing of its method of
adopting SFAS No. 133.

Forward-Looking Statements

    This discussion contains statements which, to the extent it is not a
recitation of historical fact, constitute "forward-looking statements" and is
intended to be subject to the safe harbor protection provided by the Private
Securities Litigation Reform Act of 1995.  A number of important factors
affecting the Company's business and financial results could cause actual
results to differ materially from those reflected in the forward-looking
statements or projected amounts.  Those factors include developments in the
legislative, regulatory and competitive environment, certain environmental
matters, demands for capital and the availability of cash from various
sources.
<PAGE>
<PAGE 14>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

                          PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

         The Company was an intervenor in an appeal at the Massachusetts
         Supreme Judicial Court (SJC) filed by the Massachusetts Institute of
         Technology (MIT) involving a DTE decision approving a customer
         transition charge (CTC) for the recovery of stranded investment
         costs.  By its terms, the CTC was terminated on March 1, 1998,
         coincident with the retail access date established by the
         Massachusetts Legislature in the Electric Industry Restructuring
         Act.  On September 18, 1997, the SJC remanded the CTC matter to the
         DTE for further consideration.  The SJC stated that, although
         recovery of prudent and verifiable stranded costs by utility
         companies is in the public interest and consistent with the Public
         Utility Regulatory Policies Act, the insufficiencies of the DTE's
         subsidiary findings precluded the SJC from undertaking a meaningful
         review of the DTE's calculations that formed the basis of the CTC. 
         The DTE is in the process of determining whether to hear additional
         evidence in the remand or to rely on the record and pleadings
         already filed.  On January 16, 1998, the Company had submitted to
         the DTE a customer exit charge rate tariff and sought a finding that
         the tariff would apply to MIT.  On July 23, 1998, the DTE issued a
         ruling which rejected the form of customer exit charge rate tariff,
         but opened a new investigation into whether MIT should be required
         to pay an exit charge, and, if so, what the amount of the exit
         charge should be.  Also, the DTE's investigation includes whether
         this case should be joined with the remand proceeding currently
         before the DTE.  This issue is discussed more fully in the Company's
         1997 Annual Report on Form 10-K.  At this time, management is unable
         to predict the ultimate outcome of this proceeding.

Item 5.  Other Information

         None

Item 6.  Exhibits and Reports on Form 8-K

   (a)   Exhibits

         Exhibit 27 - Financial Data Schedule.

         Filed herewith as Exhibit 1 is the Financial Data Schedule for the
         three months ended June 30, 1998.

   (b)   Reports on Form 8-K

         A report on Form 8-K was filed June 5, 1998 for an event first
         reported May 27, 1998 regarding the sale of the Company's generating
         assets.
<PAGE>
<PAGE 15>

                       CAMBRIDGE ELECTRIC LIGHT COMPANY

                                  SIGNATURES


   Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                          CAMBRIDGE ELECTRIC LIGHT COMPANY
                                                    (Registrant)


                                          Principal Financial and
                                            Accounting Officer:



                                          JAMES D. RAPPOLI                 
                                          James D. Rappoli,
                                          Financial Vice President
                                            and Treasurer




Date:   August 14, 1998