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               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, 1997

                                      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 2-30057

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

        Massachusetts                                          04-1733577  
(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, 1997

        Common Stock, $25 par value                 1,523,200 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

                            CANAL ELECTRIC COMPANY

                           CONDENSED BALANCE SHEETS

                      JUNE 30, 1997 AND DECEMBER 31, 1996

                                    ASSETS

                            (Dollars in thousands)



                                                    June 30,     December 31,
                                                      1997           1996    
                                                   (Unaudited)

PROPERTY, PLANT AND EQUIPMENT, at original cost    $463 557        $464 003
  Less -  Accumulated depreciation and
          amortization                              189 615         179 307
                                                    273 942         284 696
  Add  -  Construction work in progress               2 880             943
          Nuclear fuel in process                     2 068           1 597
                                                    278 890         287 236

INVESTMENTS
  Equity in corporate joint venture                   3 302           3 321

CURRENT ASSETS
  Cash                                                   13              12
  Accounts receivable-
    Affiliated companies                              9 676          10 294
    Other                                             7 596          12 390
  Electric production fuel oil                          836             979
  Prepaid taxes -
   Income                                               -                64
   Property                                             -               795
  Other                                               2 724           3 087
                                                     20 845          27 621

DEFERRED CHARGES
  Regulatory assets                                  18 735          19 859
  Other                                               9 061           5 486
                                                     27 796          25 345

                                                   $330 833        $343 523
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                            CANAL ELECTRIC COMPANY

                           CONDENSED BALANCE SHEETS

                      JUNE 30, 1997 AND DECEMBER 31, 1996

                        CAPITALIZATION AND LIABILITIES

                            (Dollars in thousands)

                                                    June 30,     December 31,
                                                      1997           1996    
                                                   (Unaudited)
CAPITALIZATION
  Common Equity -
   Common stock, $25 par value -
     Authorized - 2,328,200 shares
     Outstanding - 1,523,200 shares,
       wholly-owned by Commonwealth
       Energy System (Parent)                      $ 38 080        $ 38 080
   Amounts paid in excess of par value                8 321           8 321
   Retained earnings                                 56 314          52 620
                                                    102 715          99 021
  Long-term debt, including premiums, less
   current sinking fund requirements and 
   maturing debt                                     84 267          83 618
                                                    186 982         182 639

CAPITAL LEASE OBLIGATIONS                            11 591          11 878

CURRENT LIABILITIES
  Interim Financing -
   Notes payable to banks                            16 575          26 550
   Advances from affiliates                           1 840           7 250
                                                     18 415          33 800
  Other Current Liabilities -
   Current sinking fund requirements                    350             350
   Accounts payable -
     Affiliated companies                             1 444           1 347
     Other                                           14 592          18 123
   Accrued taxes -
     Income                                             414             -  
     Local property and other                            21             795
   Capital lease obligations                            575             576
   Accrued interest and other                         6 449           3 986
                                                     23 845          25 177
                                                     42 260          58 977
DEFERRED CREDITS
  Accumulated deferred income taxes                  71 316          71 550
  Unamortized investment tax credits and other       18 684          18 479
                                                     90 000          90 029

COMMITMENTS AND CONTINGENCIES
                                                   $330 833        $343 523

                            See accompanying notes.
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                            CANAL ELECTRIC COMPANY

             CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS

           FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996

                            (Dollars in thousands)
                                  (Unaudited)
                                      Three Months Ended    Six Months Ended
                                        1997      1996        1997     1996
                                                (Dollars in Thousands)

ELECTRIC OPERATING REVENUES
  Sales to affiliated companies       $27 997   $22 219    $ 62 307  $ 49 965
  Sales to non-affiliated companies    16 551    17 856      43 927    38 031
                                       44 548    40 075     106 234    87 996

OPERATING EXPENSES
  Fuel used in production              19 174    14 941      55 052    37 902
  Electricity purchased for resale      1 307     1 155       3 979     3 092
  Other operation and maintenance       9 697    10 300      18 293    19 248
  Depreciation                          5 066     4 546      10 131     9 092
  Taxes - 
    Income                              2 478     2 399       5 020     5 484
    Local property                        760       537       1 430     1 233
    Payroll and other                     224       192         452       423
                                       38 706    34 070      94 357    76 474

OPERATING INCOME                        5 842     6 005      11 877    11 522

OTHER INCOME                              114       349         238     2 293

INCOME BEFORE INTEREST CHARGES          5 956     6 354      12 115    13 815

INTEREST CHARGES
  Long-term debt                        1 976     2 006       3 954     4 055
  Other interest charges                  333       534         724     1 007
  Allowance for borrowed funds
    used during construction              (38)      (25)        (65)      (55)
                                        2 271     2 515       4 613     5 007

NET INCOME                              3 685     3 839       7 502     8 808

RETAINED EARNINGS -
  Beginning of period                  56 437    53 201      52 620    52 070
  Dividends on common stock            (3 808)   (4 951)     (3 808)   (8 789)

RETAINED EARNINGS -
  End of period                       $56 314   $52 089    $ 56 314  $ 52 089


                            See accompanying notes.

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                            CANAL ELECTRIC COMPANY

                      CONDENSED STATEMENTS OF CASH FLOWS

                FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996

                            (Dollars in thousands)
                                  (Unaudited)


                                                       1997           1996 
                                                     (Dollars in Thousands)

OPERATING ACTIVITIES
  Net income                                         $ 7 502        $ 8 808
  Effects of noncash items -
   Depreciation and amortization                      11 880         11 465
   Deferred income taxes and investment
     tax credits, net                                   (611)          (859)
   Earnings from corporate joint venture                (222)          (250)
  Dividends from corporate joint venture                 241            192
  Change in working capital, exclusive of cash
   and interim financing                               5 445         (6 580)
  All other operating items                           (2 728)          (754)
Net cash provided by operating activities             21 507         12 022

INVESTING ACTIVITIES
  Additions to property, plant and equipment
   (exclusive of AFUDC)                               (2 248)        (7 041)
  Allowance for borrowed funds used
   during construction                                   (65)           (55)
Net cash used for investing activities                (2 313)        (7 096)

FINANCING ACTIVITIES
  Payment of short-term borrowings                    (9 975)          (725)
  Payment of dividends                                (3 808)        (8 789)
  Advances from (payments to) affiliates              (5 410)         8 375
  Long-term debt issue refunded                          -           (3 420)
  Sinking fund payments                                  -             (367)
Net cash used for financing activities               (19 193)        (4 926)

Net increase in cash                                       1              -
Cash at beginning of period                               12             12
Cash at end of period                                $    13        $    12


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
  Cash paid during the period for:
   Interest (net of capitalized amounts)             $ 4 428        $ 5 042
   Income taxes                                      $ 4 527        $ 8 376




                            See accompanying notes.
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                            CANAL ELECTRIC COMPANY

                    NOTES TO CONDENSED FINANCIAL STATEMENTS

(1)  General Information

         Canal Electric Company (the Company) is a wholly-owned subsidiary of
     Commonwealth Energy System.  The parent company is referred to in this
     report as the "System" and together with its subsidiaries is collectively
     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 non-regulated companies.

         The Company has 111 regular employees including 85 (77%) represented
     by a collective bargaining agreement that was scheduled to expire in May
     1997.  During the first quarter of 1997, a new agreement was reached that
     will remain in effect through May 31, 2001.  Employee relations have
     generally been satisfactory.

         During the second quarter of 1997, the system initiated a voluntary
     personnel reduction program.  For additional information, see the
     "Personnel Reduction Program" section under Management's Discussion and
     Analysis of Results of Operations.  

         The Company is a wholesale power company and operates two generating
     units under life-of-the-unit power contracts on file with the Federal
     Energy Regulatory Commission (FERC).  The price of power is based on a
     two-part rate consisting of a demand charge and an energy charge.  The
     demand charge covers all expenses except fuel costs and includes the re-
     covery of the original investment.  It also provides for any adjustments
     to that investment over the economic lives of the units.  The energy
     charge is based on the cost of fuel and is billed to each purchaser in
     proportion to its purchase of power.  Purchasers are billed monthly.

         The Company also procures bulk electric power at the request of and
     for its affiliates thereby securing cost savings for their respective
     customers by planning for a power supply on a single system basis.

(2)  Significant Accounting Policies

         (a) Principles of Accounting

         Generally, expenses which benefit more than one interim period are
     allocated to other periods to more appropriately match revenues and
     expenses.  Income tax expense is recorded using the statutory rates in
     effect applied to book income subject to tax recorded in the interim
     period.

         The unaudited financial statements for the periods ended June 30,
     1997 and 1996, reflect, in the opinion of the Company, all adjustments
     (consisting of only normal recurring accruals) 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 presenta-
     tion used in the current period's financial statements.

         The Company's significant accounting policies are described in Note 2
     of Notes to Financial Statements included in its 1996 Annual Report on
     Form 10-K filed with the Securities and Exchange Commission.  For interim
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                            CANAL ELECTRIC COMPANY

     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.

         (b) Regulatory Assets

         The Company is regulated as to rates, accounting and other matters by
     various authorities, including the FERC and the Massachusetts Department
     of Public Utilities (DPU).

         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 FERC has
     permitted or is expected to permit recovery of specific costs over time. 
     Effective January 1, 1996, the Company adopted SFAS No. 121, "Accounting
     for the Impairment of Long-Lived Assets and for Long-Lived Assets to be
     Disposed Of."  SFAS No. 121 imposes stricter criteria for regulatory
     assets by requiring that such assets be probable of future recovery at
     each balance sheet date.  SFAS No. 121 did not have an impact on the
     Company's financial position upon adoption.  This result may change as
     modifications are made to the current regulatory framework due to ongoing
     electric utility restructuring efforts in Massachusetts.  For additional
     information relating to electric industry restructuring, see Management's
     Discussion and Analysis of Results of Operations.

         The principal regulatory assets included in deferred charges were as
     follows:
                                               June 30,     December 31,
                                                 1997           1996    
                                               (Dollars in thousands)

        Deferred income taxes                  $13 679         $13 597
        Seabrook related costs                   5 056           6 262
          Total regulatory assets              $18 735         $19 859

(3)  Commitments and Contingencies

         Construction

         The Company is engaged in a continuous construction program presently
     estimated at $68.2 million for the five-year period 1997 through 2001. 
     Of that amount, $20 million is estimated for 1997.  As of June 30, 1997,
     construction expenditures, including an allowance for funds used during
     construction, amounted to approximately $2.3 million.  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 factors.  The Company expects to finance these expenditures
     with internally generated funds and short-term borrowings.
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                            CANAL ELECTRIC 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, 1997 and 1996 and unit sales for these periods is shown below:

                                     Three Months Ended    Six Months Ended
                                           June 30,           June 30,
                                        1997 and 1996       1997 and 1996
                                              Increase (Decrease)
                                            (Dollars in thousands)

Electric Operating Revenues          $  4 473    11.2%     $ 18 238    20.7%

Operating Expenses -
  Fuel used in production               4 233    28.3        17 150    45.2
  Electricity purchased for resale        152    13.2           887    28.7
  Other operation and maintenance        (603)   (5.6)         (955)   (5.0)
  Depreciation                            520    11.4         1 039    11.4
  Taxes -
    Federal and state income               79     3.3          (464)   (8.5)
    Local property and other              255    35.0           226    13.6
                                        4 636    13.6        17 883    23.4

Operating Income                         (163)   (2.7)          355     3.1

Other Income                             (235)  (67.3)       (2 055)  (89.6)

Income Before Interest Charges           (398)   (6.3)       (1 700)  (12.3)

Interest Charges                         (244)   (9.7)         (394)   (7.9)

Net Income                           $   (154)   (4.0)      $(1 306)  (14.8)

Unit Sales (MWH) Increase             266 177    44.9       861 092    59.7

                                                                             
                             Three Months Ended          Six Months Ended
                                   June 30,                  June 30,
MWH Unit Sales                  1997 and 1996             1997 and 1996

Canal Unit 1                  526 167     483 411    1 507 869   1 054 710
Canal Unit 2                  256 933         -        555 634     135 094
Seabrook 1                     51 111      87 839      126 952     164 538
Purchased for Resale           24 994      21 778      113 408      88 429
                              859 205     593 028    2 303 863   1 442 771

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                            CANAL ELECTRIC COMPANY

  Revenue, Fuel and Purchased Power

      Operating revenues for the three and six months ended June 30, 1997
  increased approximately $4.5 million or 11.2% and $18.2 million or 20.7%,
  respectively due primarily to a significant increase in unit sales during
  both periods.  The increase in unit sales during both periods was due to
  the increased availability of Units 1 and 2 due to the timing of both
  scheduled and unscheduled maintenance.  Also affecting unit sales in both
  periods was a lower level of power from Seabrook reflecting the timing of a
  refueling outage which occurred during the quarter and an increase in
  purchases made on behalf of affiliated retail distribution companies.

      The significant increase in fuel used in production during the current
  three and six-month periods reflects the increased availability of Units 1
  and 2.  Fuel, purchased power and transmission costs for the current three
  and six-month periods represented approximately 48% and 57%, respectively,
  of operating revenues and averaged 2.48 cents and 2.63 cents per KWH,
  respectively, as compared to 2.86 cents and 2.96 cents per KWH for the same
  periods of 1996.

  Other Operating Expenses

      During the current quarter and first six months of 1997, other operation
  and maintenance decreased by $603,000 or 5.6% and $955,000 or 5%, respec-
  tively, due primarily to lower postretirement benefit costs ($828,000 and
  $1,055,000, respectively).  Also affecting the change in other operation
  and maintenance during both periods was lower maintenance related to Unit
  2, offset by an increase in maintenance related to Seabrook.  Depreciation
  expense increased in both current periods due to higher levels of plant-in-
  service.  Federal and state income taxes decreased 8.5% in the six-month
  period due to a lower level of pretax income.  The increase in local
  property and other taxes reflects changes in property assessments.

  Other Income and Interest Charges

      The significant decrease in other income during the first half of 1997
  was primarily due to the absence of the 1996 reversal of a reserve for
  costs associated with postretirement benefits (approximately $1.8 million)
  following Federal Energy Regulatory Commission acceptance of rate schedules
  which provided for the recovery of these costs over a six-month period that
  began in March 1996.

      Total interest charges decreased for the current quarter and first six
  months of 1997 by 9.7% and 7.9%, respectively, due to lower long-term
  interest reflecting the retirement of Series A First Mortgage Bonds during
  the second quarter of 1996 and a lower average level of short-term
  borrowings.

  Personnel Reduction Program

      As initially discussed in the Company's 1996 Annual Report on Form 10-K
  filed with the Securities and Exchange Commission, the Company announced
  the details of a system-wide voluntary Personnel Reduction Program (PRP) in
  May 1997.  The goal of the PRP is to achieve a reduced, more efficient and
  more productive workforce in response to the significant regulatory changes
  facing the System's companies.  This action follows the recent management
  consolidation of the system's electric and gas operations.  The expectation
  is that the workforce will be reduced by 15% to 20%. 
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                            CANAL ELECTRIC COMPANY

      The PRP is offered to substantially all regular and part-time employees
  of the system.  Eligibility for employees covered by collective bargaining
  agreements is subject to negotiation.  The election period is from May 13
  through August 29, 1997.  The system reserves the right to limit the number
  of participants in the program to 300; however, the system expects the
  final participation level to exceed this amount.

      The program provides severance based on years of service, the continu-
  ation of certain health and dental insurance for specified periods and
  limited reimbursement for certain educational and/or outplacement services.

      Currently, approximately 26% of the Company employees have applied for
  the PRP.  The Company estimates the cost of termination benefits, as
  described above, for the expected participants will approximate $2.7
  million.  These costs have been deferred and will be addressed separately
  as part of the industry restructuring process.

  Electric Industry Restructuring  

      On December 30, 1996, the DPU issued a final order announcing its "Model
  Rules and Legislative Proposal" as a guide in the creation of a competitive
  market for electric generation in Massachusetts.  Legislative proposals
  concerning electric industry restructuring were filed by the former Gover-
  nor of the Commonwealth of Massachusetts on February 24, 1997, and by the
  Massachusetts Legislature's own Joint Committee on Electric Utility Re-
  structuring (the Committee) on March 20, 1997.  Each of the plans proposed
  by the DPU, the Governor and the Committee is intended to provide customers
  with the opportunity to achieve lower electric bills beginning on the
  target date of January 1, 1998.

      The Company has FERC-approved power contracts in effect with various
  retail electric utilities (including certain affiliates).  The retail
  electric utilities with whom the Company has power contracts are directly
  affected by the state's electric industry restructuring order.  The Company
  believes that it will continue to collect the costs associated with these
  FERC-approved power contracts.  However, the auction process discussed
  below could have an impact on these contractual obligations in the future.

      In its "Model Rules," the DPU has proposed that the minimum structural
  reorganization needed to create a competitive market is the functional
  separation of generation, transmission and distribution within one inte-
  grated company, and the establishment of a separate marketing affiliate if
  a company retains generation assets.  Other elements of the DPU's Model
  Rules provide that electric customers will be able to buy their power on
  the open market; distribution services will remain a service that continues
  to be provided exclusively by the existing local distribution companies in
  clearly defined service territories; and customers will have three types of
  electric generation choices.  First, customers may enter into unregulated
  agreements with a competitive supplier for the provision of generation. 
  Second, customers may continue to buy power directly from their electric
  distribution company at a price regulated by the DPU, which is known as
  standard offer service.  Third, customers who have received generation from
  a competitive supplier but who, for any reason, have stopped receiving such
  generation will be able to receive default generation service provided by
  distribution companies at spot market price.

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                            CANAL ELECTRIC COMPANY

      The former Governor's restructuring proposal includes: a standard offer
  generation service option for residential and small business customers for
  a five-year period; recovery by electric utilities of net, non-mitigable
  stranded costs over a 12-year period; the recovery of reasonable employee
  transition costs for utility workers directly affected by electric industry
  restructuring; and, at a minimum, the functional separation of generation,
  transmission and distribution services.  The Governor's legislation also
  provides a mechanism for electric utilities to reduce their stranded costs
  by financing the renegotiation or buy-out of above-market purchased power
  contracts.  The bill authorizes the Massachusetts Industrial Finance Agency
  to issue electric rate reduction bonds to electric utilities that receive a
  financing order from the DPU.  The criteria for eligibility to apply for
  the financing order include: (1) DPU approval of a plan to provide retail
  access and divestiture of non-nuclear generating assets; and (2) demonstra-
  tion that such contract buy-out or purchase, including the cost of financ-
  ing, will substantially reduce costs to ratepayers.

      The Committee issued both a comprehensive report, which outlines options
  for the Legislature's consideration as debate on restructuring continues,
  and a set of recommendations and a legislative package that is designed to
  implement electric industry restructuring in Massachusetts.  Elements of
  the Committee's legislative proposal include the functional separation of
  utility companies into generation, transmission and distribution companies. 
  Transmission and distribution companies would remain regulated while
  generation companies would be unregulated with pricing determined by the
  market.  The Committee's proposal establishes a retail access date of
  January 1, 1998 or later, as determined by the DPU, calls for a 10% rate
  reduction for all customers and allows for the recovery of certain net,
  non-mitigable stranded costs over a ten-year period.  The proposal also
  encourages divestiture as a mitigation measure by authorizing companies to
  securitize stranded costs through the issuance of rate reduction bonds only
  where the company has divested itself of non-nuclear generation assets.  On
  May 6, 1997, the system submitted comments on the Committee's legislative
  proposal making specific recommendations for changes with respect to
  increasing the time frame for recovery of stranded costs including power
  contracts, the increased use of securitization and other issues.  The
  Massachusetts Legislature, which will render the final passage of any
  restructuring law, is now considering the legislative proposals of the DPU,
  the former Governor and the Committee. 

      During the last several months, three Massachusetts electric utilities
  have announced negotiated settlement agreements with the Massachusetts
  Attorney General's Office (Attorney General) that include divestiture of
  generating assets, provision for a 10% reduction in customers' charges and
  recovery of stranded costs through a non-bypassable access charge.  One
  settlement agreement has been approved by the DPU.  Implementation of any
  restructuring settlement may be affected by actions of the Massachusetts
  Legislature.

      The system has recently engaged in formal settlement discussions with
  the Attorney General and has provided the Attorney General with information
  to further the development of a comprehensive settlement.  In the unlikely
  event that the parties are unable to complete a settlement, the system
  would file a full restructuring plan with the DPU.

      On March 31, 1997, the system submitted a report to the DPU which
  detailed the proposed auction process for selling its electric generation 
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                            CANAL ELECTRIC COMPANY

  assets (including the Company's Units 1 and 2) and entitlements.  The
  process will include a standard, sealed-bid auction for generation assets
  and purchased power contracts with the securitization of remaining obliga-
  tions.  The auction process would provide a market-based approach to
  maximizing stranded cost mitigation.  The system anticipates that the
  bidding process will begin shortly after Labor Day.

  Environmental Matters

      The Company is subject to laws and regulations administered by federal,
  state and local authorities relating to the quality of the environment. 
  These laws and regulations affect, among other things, the siting and
  operation of electric generating and transmission facilities and can
  require the installation of expensive air and water pollution control
  equipment.  These regulations have had an impact on the Company's opera-
  tions in the past and will continue to have an impact on future operations,
  capital costs and construction schedules of major facilities.
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                            CANAL ELECTRIC COMPANY

                          PART II - OTHER INFORMATION

Item 1.       Legal Proceedings

        None.

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
        six months ended June 30, 1997.

        Filed herewith as Exhibit 2 is the restated Financial Data Schedule
        for the six months ended June 30, 1996.

   (b)  Reports on Form 8-K

        No reports on Form 8-K were filed during the three months ended June
        30, 1997.
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                            CANAL ELECTRIC 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.



                                              CANAL ELECTRIC COMPANY
                                                   (Registrant)


                                              Principal Financial Officer:



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



Date:  August 14, 1997