<PAGE>

[LOGO]
COLONIAL
GAS COMPANY

                                                                January 12, 1999

UNITED PARCEL SERVICE
OVERNIGHT DELIVERY

Robert G. Riga, Director
East Coast Marketing
Algonquin Gas Transmission Company
1284 Soldiers Field Road
Boston, MA 02135

RE: (1) Letter Agreement sent December 11, 1998; and
    (2) Service Agreement - Rate Schedule AFT-1

Dear Bob:

      First, pursuant to your letter dated December 11, 1998, enclosed are two
partially executed originals of the Letter Agreement between Texas Eastern
Transmission Corporation and Colonial Gas Company. Please fully execute both
copies and return one for our files. Second, please find enclosed a fully
executed Algonquin Gas Transmission Company Service Agreement - Rate Schedule
AFT-1 (Contract No. 97036) for your files.

      If you have any questions concerning the enclosed documents, please do not
hesitate to contact me directly at (978) 322-3202.

                                              Sincerely,


                                              /s/ Bruce B. Glendening

                                              Bruce B. Glendening
                                              Regulatory Counsel

BBG/gad
Enclosures

cc: John P. Harrington-Colonial Gas Company
<PAGE>

                                                                   EXHIBIT 10.47

[LOGO]
Duke
Energy(SM)

                                                       Texas Eastern
                                                       Transmission Corporation

                                                       Algonquin Gas
                                                       Transmission Company
                                                       Duke Energy Companies

                                                       1284 Soldiers Field Road
                                                       Boston, MA 02135
Thomas C. O'Connor
Vice President               January 6, 1999           617/560-1386 OFFICE
East Coast Marketing                                   617/560-1392 FAX

via Overnight Delivery

Mr. John P. Harrington
Senior Vice President
Colonial Gas Company
40 Market Street
P.O. Box 3064
Lowell, MA 01853

RE:   Firm Transportation Service Agreements between
      Texas Eastern Transmission Corporation and Colonial Gas Company

Dear John:

      Texas Eastern Transmission Corporation ("Pipeline") and Colonial Gas
Company ("Customer") are parties to certain firm transportation service
agreements entered into pursuant to rate schedules on file as part of Pipeline's
FERC Gas Tariff (Pipeline Contract Nos. 330869, 800288, 800289, 800313, 800400,
800419, 800420, 800469, and 800470, referred to herein individually and
collectively as the ("Service Agreements")). Pursuant to Customer's request as a
result of its increasingly competitive market environment and in consideration
of the mutual covenants and agreements contained herein, Pipeline and Customer
hereby agree as follows:

1.    Beginning August 1, 2001, and continuing through July 31, 2003, ("Discount
      Term"), Pipeline agrees to discount the reservation charge rates
      applicable to the Service Agreements by an amount calculated to achieve a
      $13,639.17 per month reduction in reservation charges during the Discount
      Term. The discount agreed to herein shall not be applicable to any time
      period during which the rate reduction set forth in Article IV of the
      Offer of Settlement filed with and approved by the Federal Energy
      Regulatory Commission in Docket Nos. RP98-198-000 and RP85-177-126 is in
      effect. Notwithstanding, however, in no event will Pipeline charge a rate
      greater than or less than the respective maximum or minimum rates on file
      with the Federal Energy Regulatory Commission ("Commission") for service
      under the Service Agreements. At the expiration of the Discount Term, the
      rates for service under the Service
<PAGE>

Mr. John P. Harrington
Colonial Gas Company
January 6, 1999
Page 2

      Agreements will be the maximum filed tariff rates under Pipeline's
      applicable rate schedules pursuant to which service under the Service
      Agreements is provided, plus all applicable surcharges and Applicable
      Shrinkage, unless otherwise agreed to in writing by the parties.

2.    Pipeline and Customer recognize that Pipeline's rates, including current
      or future surcharges, for service under the Service Agreements may be
      subject to modification from time to time. With regard to the rates for
      service under the Service Agreements, Pipeline and Customer expressly
      agree that Customer shall be entitled to refunds of payments paid by
      Customer pursuant to the Service Agreements only in the event the total
      final, non-appealable maximum rates as determined by the Commission for a
      given time period ("Final Maximum Rate") is lower than the total rate
      actually paid by Customer during such period ("Actual Rate"). Subject to
      the condition precedent set forth in the foregoing sentence, Customer's
      principal refund shall be equal to the product of (i) the difference
      between the Actual Rate and the Final Maximum Rate and (ii) Customer's MDQ
      specified in the Service Agreements during the refund period. Customer
      expressly agrees not to initiate, instigate, or otherwise participate in
      any action or proceeding for the purpose of obtaining refunds in excess of
      the foregoing amount.

3.    Customer acknowledges and agrees that all terms and conditions of
      Pipeline's FERC Gas Tariff, as effective from time to time, and applicable
      form of service agreement, including provisions for filing of changes in
      Pipeline's FERC Gas Tariff and in rates, which changes may affect this
      Agreement, are applicable to the Service Agreements. In the event of a
      conflict between this Agreement and Pipeline's FERC Gas Tariff and/or form
      of service agreement, Pipeline's FERC Gas Tariff and/or the form of
      service agreement shall control.

4.    This Agreement shall be interpreted and performed in accordance with the
      laws of the State of Texas without recourse to the law governing conflict
      of laws.

5.    The terms and conditions of this Agreement shall be effective only during
      the period beginning August 1, 2001 and continuing through July 31, 2003
      and shall apply only to the Service Agreements.
<PAGE>

Mr. John P. Harrington
Colonial Gas Company
January 6, 1999
Page 3

      If the terms and conditions set forth in this Agreement are in accordance
with our understanding and agreement, please execute this Agreement in the space
provided below and return all originals to Pipeline. A fully executed original
will be returned to you for your records.

                                Very truly yours,


                                Thomas C. O'Connor
                                Vice President
                                Texas Eastern Transmission Corporation
                                Algonquin Gas Transmission Company


ACCEPTED AND AGREED TO
THIS 11th DAY OF JANUARY, 1999

COLONIAL GAS COMPANY


By: /s/ John P. Harrington
    -----------------------------

Title: Senior V.P. - Gas Supply
       --------------------------