[EXHIBIT 10e TO COLONIAL GAS COMPANY
           10-K FOR YEAR ENDED DECEMBER 31, 1997]

         1997 TRANSITIONAL EXECUTIVE INCENTIVE PLAN
                              
Colonial Gas Company (the "Company") has adopted a
variable pay executive incentive plan (the "Transition
Plan") effective for calendar year 1997 as a means of
transitioning to the proposed Executive Performance and
Equity Incentive Plan.  Eligible Company executives under
the Transition Plan are those holding positions of Vice
President and above during 1997.  With respect to such
eligible executives, the Transition Plan replaces and
supersedes the Company's rate increase deferral incentive
policy (the "Rate Case Deferral Plan") which was effective
from 1995 through 1997.  The awards received by such
executives under the Rate Case Deferral Plan for 1997 shall
be deducted from the amounts to which they may be entitled
under the Transition Plan.

The Transition Plan provides eligible executives with cash
incentive awards (stated as a percentage of base salary)
based upon the following three factors relating to the
Company's 1997 performance:

     1.   1997 return on equity as compared to the Edward D.
          Jones natural gas distribution company index.
          This factor represents 31.25% of the incentive as
          follows:
          
          Award Potential
          
               Threshold - Colonial ranks in top 50%
               Target -  Colonial ranks in top 25%
               Maximum - Colonial ranks in top 10%
          
                            Award %     Factor    Incentive
                                                      %
                                                       
               Threshold     12.50%     31.25%       3.91%
               Target        25.00%     31.25%       7.81%
               Maximum       50.00%     31.25%      15.63%
          
     2.   1997 Operations and Maintenance Expense per
          customer as compared to other New England natural
          gas distribution companies.  This factor
          represents 43.75% of the incentive, as follows:
     
          Award Potential
          
               Threshold - Colonial ranks in top 25%
               Target -  Colonial ranks in top 15%
               Maximum - Colonial ranks as number 1
          
                            Award %     Factor    Incentive
                                                      %
                                                       
               Threshold     12.50%     43.75%       5.47%
               Target        25.00%     43.75%      10.94%
               Maximum       50.00%     43.75%      21.88%
          
     3.   1997 total shareholder return as compared to the
          Edward D. Jones natural gas distribution company
          index. This factor represents 25% of the
          incentive, as follows:
     
          Award Potential
          
               Threshold - Colonial ranks in top 50%
               Target -  Colonial ranks in top 35%
               Maximum - Colonial ranks in top 25%
          
                            Award %     Factor    Incentive
                                                      %
                                                       
               Threshold     12.50%     25.00%       3.13%
               Target        25.00%     25.00%       6.25%
               Maximum       50.00%     25.00%      12.50%
          
Notwithstanding the above, no incentive award under the
Transition Plan shall exceed  20% of the 1997 base salary of
the applicable participant. As stated above, any incentive
award under the Transition Plan will be net of the award
paid in 1997 to the participant under the Rate Case Deferral
Plan.

         [END OF EXHIBIT 10e TO COLONIAL GAS COMPANY
           10-K FOR YEAR ENDED DECEMBER 31, 1997]