SECURITIES AND EXCHANGE COMMISSION
                   Washington, D.C.  20549

                          FORM 10-K
(X)  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
               SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended           December 31, 1998          
                        ---------------------------------------.

(   ) 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 1-8060.
                           AQUARION COMPANY
                           ----------------
    (Exact name of registrant as specified in its charter)

                          DELAWARE                      06-0852232  
              ----------------------------         ----------------
               (State or other jurisdiction of      (I.R.S. Employer
               incorporation or organization)      Identification No.)

835 Main Street, Bridgeport, Connecticut                 06604  
----------------------------------------                -------
(Address of principal executive offices)               (Zip Code)

Registrant's telephone number, including area code (203) 335-2333   
                                                   --------------
Securities registered pursuant to Section 12(b) of the Act:

Title of each class  Name of each exchange on which registered
-------------------  -----------------------------------------

Common Stock, no par value      New York Stock Exchange
Series A Junior
Participating Preferred         New York Stock Exchange
Stock Purchase Rights

 Securities registered pursuant to Section 12(g) of the Act:

                             None                         
    ------------------------------------------------------
                       (Title of class)

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 by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part IV of this Form 10-K or any
amendment to this Form 10-K.  [ X ]

The aggregate market value of the voting stock held by
nonaffiliates of the registrant: $240,254,030 (Computed by
reference to the closing price of the Registrant's Common
Stock on March 12, 1999, as reported on the New York Stock
Exchange-Composite Tape.)

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

  Class                         Outstanding at March 12, 1999
-------------                   -----------------------------
Common Stock, no par value                 7,531,211

The following documents have been incorporated by
reference:
1.   Annual Report to Shareholders for the year ended
     December 31, 1998--PART I, Item 1; PART II, Item 5,
     Item 6, Item 7 and Item 8; PART IV.
2.   Definitive Proxy Statement, dated March 15, 1999,
     for the Annual Meeting of Shareholders to be held on
     April 20, 1999--PART III.

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                            PART I

ITEM I.  BUSINESS

General

    Aquarion Company (Aquarion or the Company) is a holding
company whose subsidiaries are engaged both in the regulated
utility business of public water supply and in various
nonutility businesses.

     Aquarion's utility subsidiaries, BHC Company (BHC) and
Sea Cliff Water Company (SCWC) (collectively, the Utilities)
collect, treat and distribute water to residential, commercial
and industrial customers, to other utilities for resale and
for private and municipal fire protection.  The Utilities
provide water to customers in 30 communities with a population
of more than 500,000 people in Connecticut and Long Island,
New York.  BHC is the largest investor-owned water company in
Connecticut and with SCWC is among the 10 largest investor-
owned water companies in the nation.  The Utilities are
regulated by several state agencies, including the Connecticut
Department of Public Utility Control (DPUC)  and the New York
Public Service Commission (PSC).

               The Company's non-utility subsidiaries include: Timco,
Inc. (Timco), a timber processing company based in New
Hampshire; Aquarion Management Services, Inc. (AMS), a utility
management services business; and Main Street South
Corporation (MSSC), a real estate subsidiary formed in 1969 to
assist BHC in marketing surplus land.

               The Company was incorporated in Delaware as The Hydraulic
Company in 1969 to become the parent company to BHC, a
Connecticut corporation founded in 1857.  The corporate name
was changed to Aquarion Company in 1991.  The Company's
executive offices are located at 835 Main Street, Bridgeport,
Connecticut 06604-4995, and its telephone number is (203) 335-
2333.

Recent Developments

   Stock Split
   -----------
              
   On February 16, 1999, the Board of Directors approved a
3-for-2 stock split of the Company's common stock.  The split
was effected in the form of a 50 percent stock distribution on
the Company's common stock, payable on March 22, 1999 to all
shareholders of record as of March 1, 1999.  

    Financing Activities.  On November 1, 1998, BHC redeemed
    --------------------
its Series R, 6.875 percent first mortgage bonds, which were
issued in 1968.  On January 4, 1999, the Company repaid
Aquarion's 5.95 percent unsecured Senior Note, issued in 1994,
in the amount of $10,000,000.

     Real Estate
     -----------

     In June 1998, the Aspetuck Land Trust, a non-profit land
preservation organization, exercised a statutory right of
first refusal allowing it to purchase, at the original
contract terms, substantially all of the Trout Brook Valley
property owned by BHC for approximately $12,400,000. 
Connecticut statutes afford the buyer fifteen months to close,
or until September 8, 1999.  As of December 31, 1998, the
Company received $1,400,000 on deposit from the Aspetuck Land
Trust.  Prior to this exercise, in February 1997, the Company
had entered into a contract to sell the Trout Brook Valley
property for approximately $14,000,000 to a private developer. 
The sale has been approved by the DPUC. The Town of Weston,
Connecticut has notified the Company of its intention to
purchase, for approximately $820,000, the approximately 45
acre portion of BHC s Trout Brook Valley property located in
Weston pursuant to its statutory right of first refusal. 
Although both BHC and the Aspetuck Land Trust have no
objection to this purchase, BHC has indicated that it will only

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sell the Weston portion at or after the closing of the
sale of the remainder of its Trout Brook Valley property.  BHC
has recently filed a request with the DPUC for a declaratory
ruling to the effect that the Town of Weston is not entitled
to purchase only the Weston property.   

    The Company anticipates that the after-tax gain from the
current sale will be approximately $6,000,000, to be
recognized over an applicable amortization period.  In its
decision approving the original sale, the DPUC granted the
Company a 10-year amortization period, which provides
ratepayers with 55 percent and shareholders with 45 percent of
the after-tax gain on approximately 60 percent of BHC s
portion of the property.  Due to the change in purchaser and
its intended use of the property as open space, the Company is
considering filing an amended application with the DPUC
seeking a shorter amortization period.

    In December 1998, five parcels of land  located in
Shelton, Connecticut and totaling 401 acres, were sold to the
City of Shelton for approximately $6,800,000.  The Company
received $2,268,000 in cash and a note receivable for the
balance which will be paid in two equal installments of
$2,266,500 in December 1999 and July 2000.  The after-tax net
gain attributable to the sale amounted to $3,510,000.  The
sale of an additional 30-acre parcel of land, originally
scheduled to be included in the December 1998 sale, is
expected to close in early 1999, after BHC receives the
necessary permits from the Connecticut Department of Health
Services.

   In 1995, the Company entered into an agreement with a
local developer to sell a 40-acre parcel of land located in
New Canaan, Connecticut, for approximately $1,950,000.  The
Company anticipates that the after-tax gain from this
transaction will be approximately $1,100,000.  The sale has
been approved by the DPUC.  The buyer has been involved in
litigation and appeals with several residents, environmental
groups and the Connecticut Department of Environmental
Protection over regulatory approvals.  Although several
appeals have been withdrawn, certain issues remain open.  The
Company anticipates closing this transaction sometime in 1999,
however, the closing could be delayed due to opposition to
granting the required permits and approvals.  No assurances
can be given at this time that such permits and approvals will
be granted.

    Rates.  On March 17, 1999, BHC's Western division
    -----
received a final decision from the DPUC for a 3.97 percent
water service rate increase designed to provide a $607,000
increase in annual water service revenues.   

    Regulatory Matters.  On October 1, 1996, the Ridgefield
    ------------------
Water Supply Company, which has subsequently been merged into
BHC, entered into a Consent Agreement with the State of
Connecticut, Department of Environmental Protection (DEP),
relating to certain water supply sources located in the Town
of Ridgefield.  The Consent Agreement requires BHC to meet
various milestones by particular dates in order to bring BHC's
Ridgefield water system into compliance with DEP's diversion
regulations. BHC's failure to timely comply with many of the
requirements of the Consent Agreement now permits DEP to
require BHC to pay certain fines.  BHC's potential maximum
exposure to such fines could be in excess of $4,000,000.  BHC
has recently been informed that this matter has been referred
by DEP to the Office of the Connecticut Attorney General for
further action.  BHC is unable to assess at this time what
impact the DEP referral to the Attorney General will have on
BHC's ability to re-negotiate the Consent Agreement or on its
potential for such civil penalties.


Utility Construction Program

   The Utilities expended $21,200,000 $27,633,000 and
$37,185,000 in 1998, 1997 and 1996 respectively, for plant
additions and modifications of existing plant facilities,
excluding an allowance for funds used during construction
(AFUDC).  Utility budgeted capital expenditures for 1999 are
approximately $27,000,000.  Management cannot predict whether
future federal, state or local regulation will require
additional material capital expenditures.

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    The Company's ability to finance its future construction
programs depends in part on future rate relief, the level of
Construction-Work-In-Progress (CWIP) rate surcharges and
future debt and equity issuances.  See "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of
Operations - Capital Resources and Liquidity" and "Business--
Public Water Supply--Rates and Regulation".

Industry Segment Information

     The Company's operations are grouped into four industry
segments:  public water supply; timber processing; real
estate; and utility management services.  The consolidated
operating revenues of the Company for the year ended December
31, 1998 were derived from the following sources: 78 percent
from public water supply, 12 percent from timber processing, 9
percent from real estate, including both MSSC and surplus
utility land sales, and 1 percent from utility management
services.  For additional information concerning each segment
for each of the years ended December 31, 1998, 1997 and 1996,
see "Note 11" of "Notes to Consolidated Financial Statements"
and "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations."

Public Water Supply

     Service Area.  The Utilities are engaged in the
collection, treatment and distribution of water for public and
private use to residential, commercial, and industrial users,
and for municipal and private fire protection services in 30
communities in parts of Fairfield, Litchfield and New Haven
counties in Connecticut and Nassau County in Long Island, New
York.  BHC also sells, as requested, water for redistribution
to customers of the Second Taxing District Water Department of
the City of Norwalk, Connecticut, and Connecticut-American
Water Company through the Southwest Regional Pipeline in
Fairfield County.

    The communities served by the Utilities as of December
31, 1998 have a population of more than 500,000, and the total
number of customer accounts as of that date was approximately
141,000.  The Utilities' service areas, primarily residential
in nature, have experienced an average growth in accounts of
approximately 1 percent per year over the last 10 years. 
Industrial use has declined significantly  in that time period
as the residential characteristics of the area have changed,
indicating an increase in the percentage of apartment
dwellings and condominium units.  Management does not
anticipate any significant growth in residential consumption
in the foreseeable future and expects continued decline in
industrial use and little or no commercial growth.

   The operating revenues of the Utilities for the 12 months
ended December 31, 1998 were derived from the following
sources: 63 percent from residential customers, 16 percent
from commercial customers, 3 percent from industrial
customers, 13 percent from fire protection customers, and 5
percent from other sources.

    Seasonality. The business of the Utilities is subject
    -----------
to seasonal fluctuations and weather variations.  The demand
for water during the warmer months is generally greater than
during the cooler months, primarily due to additional water
requirements of industrial, commercial and residential cooling
systems and various private and public outdoor uses such as
lawn and golf course sprinkling.  From year to year and season
to season, demand will vary with rainfall and temperature
levels.

    Water Supply.  Water is available from both surface and
    ------------
subsurface sources.  During 1998, approximately 87 percent of
the water supplied by the Utilities was provided by impounding
reservoirs, 12 percent by producing wells and 1 percent by
purchased water.  As of December 31, 1998, the Utilities'
reservoirs, well fields and interconnections with other water
utilities had an aggregate safe daily yield of 120 million
gallons.  Safe yield is an estimate of the supply capability
during an extended drought.  The average daily demand for
water from the Utilities in 1998 was 67 million gallons per
day (MGD).  The reservoirs of the Utilities have an aggregate
storage capacity of 30.4 billion gallons.

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   BHC has sufficient supply to meet current and projected
demands for 98 percent of its customers.  The remaining
customers are in two recently acquired systems.  BHC currently
has plans in progress to resolve supply shortages in these
systems within the next five years.  During historical drought
periods in the northeastern United States, BHC has been able
to accommodate the needs of its own customers and to offer
relief to supplement the supplies of neighboring communities
by water sales to utilities with which it has pipeline
interconnections.  Supply and distribution needs of the
Utilities undergo constant review, and the Utilities continue
to explore and develop additional ground water-supplies and
study alternative surface water sources to meet anticipated
future water requirements.

    The Connecticut Water Diversion Policy Act, enacted in
1982, prohibits any future diversions of surface or ground
water, greater than 50,000 gallons per day, without a permit
from the state Department of Environmental Protection (DEP). 
Although this law "grandfathers" surface and ground-water
supplies that existed when it was enacted, any subsequent
water diversion that might be effected by BHC is subject to a
lengthy permit application process and approval by the DEP. 
Diversion permits granted pursuant to this law are subject to
renewal when their terms, which typically run from five to ten
years, expire.

     Rates and Regulation.  The Company's utility subsidiaries
     --------------------
are subject to regulation by state regulatory commissions
having jurisdiction over their respective service areas.  BHC
is subject to regulation by the DPUC, while SCWC is subject to
regulation by the PSC.  The authorities have jurisdiction with
respect to rates, service, accounting procedures, issuance of
securities, dispositions of utility property and other related
matters.  Rates charged by the Utilities are subject to
approval by the DPUC or the PSC.  The Utilities continually
review the need for increases in water rates and historically
have sought rate relief in a timely manner in light of
increases in investment in utility plant, operating costs and
related financing costs, as well as other factors.

    The DPUC may allow a surcharge to be applied to rates in
order to provide a current cash return to water utilities on
the major portions of CWIP applicable to facilities, including
filtration plants, required for compliance with the Safe
Drinking Water Act (SDWA).  See "Environmental Regulations." 
The surcharge is adjusted quarterly, subject to DPUC approval,
to reflect increased CWIP expenditures for SDWA facilities. 
BHC has no current plans to apply for such a surcharge, which
has been granted to BHC in the past.

    Aquarion is neither an operating utility company nor a
"public service company" within the meaning of any state and
is not currently subject to general regulation by the DPUC or
PSC.  Regulatory approval is necessary, however, before
Aquarion may acquire or exercise control over any public
service company.  Regulatory approval is also required before
any other entity can acquire or exercise, or attempt to
exercise, control over Aquarion.

    Connecticut regulations govern the sale of water company
land in Connecticut and treatment of land sale proceeds.  See
"Item 2.  Properties."

    The profitability of the operations of the water utility
industry generally and of the Utilities (and hence the
Company) is largely dependent on the timeliness and adequacy
of the rates allowed by utility regulatory commissions.  In
addition, profitability is dependent on numerous factors over
which the Utilities have little or no control, such as the
quantity of rainfall and temperature in a given period of
time, industrial demand, prevailing rates of interest for
short and long-term borrowings, energy rates, and compliance
with environmental and water quality regulations.  In
addition, inflation and other factors beyond the Company's or
the Utilities' control impact the cost of construction,
materials and employee costs.
               
    Franchises and Competition.  Consistent with most water
    --------------------------
companies in Connecticut, BHC derives its rights and
franchises to operate from special acts of the Connecticut
General Assembly, which are subject to alteration, amendment
or repeal by the General Assembly and which do not grant
exclusive rights to BHC in its service areas.

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     Subject to such power of alteration, amendment or repeal
by the Connecticut General Assembly and subject to certain
approvals, permits and consents of public authority and others
prescribed by statute and by its charter, BHC has, with minor
exceptions, valid franchises free from burdensome restrictions
and unlimited as to time, and is authorized to sell potable
water in the towns (or parts thereof) in which water is now
being supplied by BHC.

   In addition to the right to sell water as set forth
above, the franchises of BHC include rights and powers to
erect and maintain certain facilities on public highways and
grounds, all subject to such consents and approvals of public
authority and others as may be required by law.  Under the
Connecticut General Statutes, BHC may, upon payment of
compensation, take and use such lands, springs, streams or
ponds, or such rights or interests therein as the Connecticut
Superior Court, upon application, may determine is necessary
to enable BHC to supply potable water for public or domestic
use in its franchise areas.

    BHC faces competition, presently not material, from a few
private water systems operated within, or adjacent to, its
franchise areas and from municipal and public authority
systems whose service areas, in some cases, overlap portions
of BHC's franchise areas.  At the present time, except as
noted above, there are no publicly owned utilities,
cooperatives or other private utility companies competing with
BHC in the areas now served, although within certain areas
there are wells owned by individuals or private industries. 
SCWC faces competition from municipal and public authority
systems whose service areas, in some cases, overlap portions
of SCWC's service area.

   Environmental Regulations.  The Utilities are subject to
   -------------------------
regulation by the Connecticut Department of Public Health
(DPH) and the County of Nassau Department of Health (CNDH)
with respect to water quality matters, use of water from
surface and subsurface sources, the location, construction and
operation of water supply facilities and the sale of certain
utility property.  Plans for new water supply systems or
expansion of existing water supply systems also must be
submitted to the DPH or CNDH for approval.  The Connecticut
DEP is authorized to regulate the operations of BHC, while the
New York Department of Environmental Conservation (DEC)
Regulates the operations of SCWC, with respect to
environmental pollution abatement, diversion of water from
surface and subsurface sources, and the location, construction
and alteration of dams and other water obstructions.

   The Utilities are subject to regulation of discharges to
the environment (air, water, land, underground storage tanks
and hazardous materials) under the provisions of the Federal
Clean Air Act, Clean Water Act and other legislation which
provides for the establishment of various environmental
regulations by the Environmental Protection Agency (EPA).  A
joint federal and state permit system has been established to
ensure that the impact to the environment from operations is
minimized.

   The Utilities are subject to regulation of drinking water
quality under the SDWA, which provides for the establishment
of uniform minimum national quality standards by the EPA, as
well as governmental authority to specify the type of
treatment process to be used for public drinking water.  EPA
regulations issued pursuant to the SDWA set limits for, among
other things, certain organic and inorganic chemical,
physical, microbiological and radiological contaminants.  The
SDWA provides that the states have the primary enforcement
responsibility for public drinking water systems, as long as
the states' regulations are no less stringent than those
adopted pursuant to SDWA.  For certain of these water quality
standards the DPH has adopted regulations that in some
instances impose standards more stringent than those imposed
under the federal regulations.

   EPA regulations pursuant to SDWA include the Surface
Water Treatment Rule (SWTR), the Total Coliform Rule (TCR) and
the Lead and Copper Rule (LCR) and other rules covering
organic and inorganic chemicals.  The water treatment
requirements of SWTR mandated the construction of the
filtration plant at BHC's Hemlocks Reservoir.  On July 1,
1997, the Warner Treatment Plant at Hemlocks Reservoir was
fully operational and placed into service.  BHC has entered
into a consent agreement with the DPH to filter the 

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water produced from the Round Pond reservoir in Ridgefield,
Connecticut or substitute alternative ground water supply by
December 31, 1999.  The Company is presently addressing these
issues with the DPH.  The TCR affects the Utilities by the
imposition of requirements for additional biological sampling
and monitoring.  The stringent requirements of the TCR may
also result in increased public notification relating to water
quality.  The LCR establishes corrosion control techniques and
requires monitoring to determine compliance with prescribed
lead and copper levels in drinking water.  If such levels are
exceeded, a multi-year program involving additional
monitoring, public notification, state-supervised corrosion
control and treatment and replacement of lead service lines
could result.  All of the Utilities' systems are in compliance
with the LCR, and the Utilities continue to monitor these
systems periodically.  The DPH has determined that BHC is in
compliance with Synthetic Organic Chemical and Inorganic
Chemical requirements, thereby avoiding additional potentially
significant treatment process construction costs.  Further
SDWA-related regulations for such water quality parameters as
disinfection by-products, radon and enhanced surface water
treatment will become effective between December 2001 and May
2005.  It is impossible to determine at this time the ultimate
impact these regulations will have on the Utilities.  

    In 1996, the SDWA was reauthorized by Congress and signed
into law.  Several of the schedules for implementation of
various regulations have been changed.  The new law eliminated
the requirement to regulate 25 new contaminants every three
years and replaced it with a requirement that the EPA consider
five new contaminants for regulation every five years.  The
1996 law also requires that the EPA, in proposing any new
drinking water regulations, show that such regulations will
improve public health.  In addition, such regulations must be
subjected to a cost-benefit analysis.  

   Water quality tests are made continuously at all of the
Utilities' water supply sources, and the Utilities believe
they are in substantial compliance with regulations
promulgated in connection with the organic chemical, inorganic
chemical, physical, and bacteriological standards for drinking
water.  BHC has been voluntarily monitoring for giardia and
cryptosporidium, radon and disinfection by-products, which are
water quality concerns that will be addressed by future
regulations.

   The Utilities believe that they are in substantial
compliance with the SDWA regulations promulgated by the EPA
and DPH, as currently applied.  Although the Utilities cannot
predict either the substance of the regulations required by
the 1996 SDWA amendments which have not yet been promulgated
or their impact on the Utilities, the primary impact on the
Utilities is expected to be in the area of increased
monitoring and reporting, although it is possible that such
regulations may require modifications to existing treatment
facilities.  Construction of new facilities may be required
for certain groundwater sources.  It is possible that costs of
compliance by the Utilities could be substantial.

    Aquifer protection legislation in Connecticut requires
each water utility to conduct ongoing groundwater data
collection and to map critical wellfield recharge areas.  The
DEP, in consultation with the DPH and DPUC, has discussed
recommendations for land use restrictions adjacent to public
water supply wellfields and possible acquisition of land to
enhance protection.  The discussions have not lead to
additional regulations and, therefore, any impact cannot be
determined at this time.  However, if BHC were to adopt
recommendations to purchase additional land around its
wellfield, the cost could range from minimal to substantial.
               
    Certain dams owned by the Utilities are subject to
inspection under the National Dam Inspection Act, as well as
the Connecticut Dam Registration Act, and dams owned in New
York are subject to inspection by the New York State DEC.  The
Utilities own 29 dams, 16 of which are subject to federal
inspection.  Although certain modifications and further
studies have been required, no material problems with respect
to these dams have been reported to the Company.

   The Utilities are required to obtain permits from the
respective regulatory authority for the location, construction
or alteration of any dam or reservoir, and to secure the
approval of the regulatory authority for 
    
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the diversion and use of water from any surface or ground source 
for public use.  The Utilities have taken all compliance actions required 
to date.

    Federal and State regulations and controls concerning
environmental matters, water quality, pollution and the
effluent from treatment facilities are still in the process of
being developed and it is not possible to predict the scope or
enforceability of regulations or standards which may be
established in the future, or the cost and affect of existing
and potential regulations and legislation upon any of the
existing and proposed facilities and operations of the
Utilities.  Further, recent and possible future developments
with respect to the identification and measurement of various
elements in water supplies and concern with respect to the
impact of one or more of such elements on public health may in
the future require the Utilities to replace or modify all or
portions of its various water supplies, to develop replacement
supplies and/or to implement new treatment techniques.  In
addition, the Company anticipates that environmental concerns
including threatened contamination of the Utilities' water
sources will become an increasing problem in the future.  Any
of the aforesaid developments may significantly increase the
Utilities' operating costs and capital requirements.  Since
the DPUC's and NYPSC's rate setting methodology permit a
utility to recover through rates prudently incurred expenses
and investments in plant, based upon past practice, the
Company expects that such expenditures and costs should
ultimately be recoverable through rates for water service, but
there can be no assurance that this will be the case.  

Timber Processing

   The Company is engaged in the timber processing business
through Timco, which operates a sawmill complex in New
Hampshire.  The sawmill complex processes and markets kiln-
dried, finished eastern white pine and other lumber.  Timco
also provides custom kiln drying services for pine mills in
Maine and southern New Hampshire.  Lumber produced by Timco is
used in the remodeling and do-it-yourself markets and, to a
lesser extent, in the construction of new homes.  It is
marketed in the Northeast and Mid-Atlantic regions through
lumber wholesalers, distributors and, in some instances,
directly to large volume retailers.  Wholesalers and
distributors, in turn, sell the lumber to the construction
trade and to retail outlets.  Timco obtains the timber used in
its products from independent loggers and from purchased
timber rights.

    Traditionally, the demand for Timco's lumber is lower in
the winter months and inventories are built up in anticipation
of the busier spring and summer season.  The lumber products
industry is very competitive, on the basis of quality and
price.  Timco faces competition on the basis of both quality
and price from domestic and foreign forest product companies,
many of which have greater resources than the Company.

Utility Management Services

   The Company, through its AMS subsidiary, provides clients
with a range of integrated utility management services,
including contract management and operations, information
services  and collections and various engineering, operations
and management consulting services.  AMS clients are private
and municipal water and wastewater utilities, including
systems engaged in privatization initiatives.  The utility
management services business is highly competitive.

Real Estate

    The Company treats real estate as a separate business
segment in order to distinguish the earnings impact from sales
of surplus utility land from the results of utility
operations.  For a discussion of the surplus off-watershed
land which BHC intends to market as appropriate, see "Item 2. 
Properties."

Employees

   As of December 31, 1998, the Company and it's
subsidiaries employed approximately 384 persons 

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on a full-time basis, including 264 in the Public Water Supply business, 
116 in the Timber Processing business and 4 in the Utility
Management Services business.  None of the Company's employees
is covered by collective bargaining arrangements, and the
Company believes its relations with its employees are
satisfactory.

ITEM 2.  PROPERTIES
-------------------

    The properties of the Utilities consist of land,
easements, rights (including water rights), buildings,
reservoirs, standpipes, dams, wells, supply lines, treatment
plants, pumping plants, transmission and distribution mains
and conduits, mains and other facilities and equipment used
for the collection, purification, storage and distribution of
water.  The Utilities own their principal properties in fee. 
The Utilities believe that their properties are in good
operating condition.  Water mains are located, for the most
part, in public streets and, in a few instances, on land owned
by the Utilities in fee and land occupied under easements,
most of which are perpetual and valid and sufficient for the
purpose for which they are held.  Although it is impractical
to investigate the validity of the title to some of the
easements held by the Utilities for distribution mains or to
clear title in the cases where such distribution easement
titles have been found defective, any such irregularities or
defects in title which may exist do not materially impair the
use of such properties in the businesses of the Utilities.

    BHC owns a 20,000-square-foot headquarters building, a
44,370-square-foot Operations Center in Bridgeport and a
28,000-square-foot office building in Monroe, Connecticut and
leases an additional 22,000-square-feet of office, laboratory
and garage space in Bridgeport for utility operations.

    At December 31, 1998, BHC owned in the aggregate 17
active reservoirs, 63 producing wells and approximately 2,059
miles of water mains, of which approximately 158 miles have
been laid in the past five years.  The rights to locate and
maintain water transmission and distribution mains are secured
by charter, easement and permit and are generally perpetual. 
Water is delivered to the distribution system from three major
reservoir systems, comprised of several smaller reservoirs and
producing wells.  BHC owns six filtration plants for treatment
of its reservoir system.  These plants have capacities ranging
from .75 to 50 MGD, respectively.

   SCWC owns four acres of land in Long Island, New York in
four separate locations that are occupied by an office and
pump station, two well sites and a tank site.  SCWC also owns
54 miles of water mains.

   Aquarion owns nonutility land totaling approximately 99
acres in Easton and Litchfield, Connecticut.  BHC owns
approximately 20,000 acres of real property, most of which
consists of reservoirs and surrounding watershed, located in
Fairfield, New Haven, and Litchfield counties in Connecticut
and in Pound Ridge and Lewisboro New York.  

    The DPH regulates Company lands in Connecticut according
to a three-tiered classification system.  Class I lands cannot
be sold, leased or transferred, except to other water
companies, the State of Connecticut, or municipalities for
water supply or protection purposes.  The DPH may authorize
transfer or change in use of Class II lands only upon a
finding that there will be no adverse impact upon the public
water supply and that any use restrictions required as a
condition of transfer are enforceable against subsequent
owners and occupants of the lands.  Class III lands, which are
off-watershed, are not currently subject to regulation by the
DPH. 

     Real property may not be sold or transferred by a water
utility without the prior approval of the DPUC and compliance
with other restrictions imposed by Connecticut law.  State
laws and regulations govern, among other things, to whom
certain water company lands may be transferred, with
preference given to other water companies, the municipality in
which the property is located, the State of Connecticut and
nonprofit land-holding organizations, in that order. 
Additionally, the disposition of the proceeds of any
permissible sale is subject to state law.

                                   8
<PAGE>
<PAGE>

     Since 1989, BHC has identified approximately 3,400 acres
of land it believes are surplus to its water supply needs. 
Almost all of this acreage is off-watershed and has either
been determined to be Class III land by the DPH or would
qualify for such designation.  Approximately 800 acres of this
land have never been in the Company's rate base. 
Approximately 1,300 acres of the identified surplus land have
been sold since 1989, of which 470 acres were never in rate
base.  Approximately 2,150 acres, including 330 which have
never been in rate base, are still available for sale,
although all of this acreage may not be marketable.

    The Equitable Sharing Statute required the DPUC to use an
accounting treatment to "equitably allocate" the economic
benefits of the net proceeds from the sales of land, that has
at any time been in the utility's rate base, between the
Company's ratepayers and its shareholders.  The Equitable
Sharing Statute provides that the economic benefits from the
sale of land that has at any time been in rate base shall be
allocated "substantially in favor" of shareholders when 25
percent or more of the land sold is to be preserved in
perpetuity for open space or recreational purposes and shall
allocate up to 100 percent of the benefits to the shareholders
if 100 percent of the land in the sale is to be used for open
space or recreational purposes.  Ratepayers do not share in gains 
from the sale of land that has never been in rate base.

ITEM 3.  LEGAL PROCEEDINGS
--------------------------

    The registrant has nothing to report for this item.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------------------------------------------------------------

    The registrant has nothing to report for this item.

                           PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED 
-----------------------------------------------------------
STOCKHOLDER MATTERS
-------------------

    Page 19 of the Company's Annual Report to Shareholders
for the year ended December 31, 1998 is incorporated by
reference herein pursuant to Rule 12b-23 of the Securities and
Exchange Act of 1934 (the Act) and to Instruction G(2) to Form
10-K.

    Aquarion has declared and paid quarterly dividends on its
common stock without interruption since its organization in
1969 and, prior thereto, BHC paid dividends annually on its
common stock without interruption since 1890.  Dividends, when
declared, are normally  paid on the 30th day of January,
April, July and October.

    The earnings of Aquarion are derived from its investments
in its subsidiaries, particularly BHC.  Aquarion's future
ability to pay dividends to holders of its Common Stock is
dependent upon the continued payment by BHC of dividends to
Aquarion.  BHC's ability to pay dividends will depend upon
timely and adequate rate relief, compliance with restrictions
under certain of the BHC debt instruments and other factors.

    Dividends on Aquarion common stock can be paid only from
its net profits and surplus.  As of December 31, 1998, the
applicable restrictions would have permitted payment of
additional dividends on Aquarion's common stock of up to
$43,705,000.

    While Aquarion's Board of Directors intends to continue
the practice of declaring cash dividends on a quarterly basis,
no assurance can be given as to future dividends or dividend
rates since they will be determined in light of a number of
factors, including earnings, cash flow, and Aquarion and BHC's
financial requirements.  See "Item 7.  Management's Discussion
and Analysis of Financial Condition and Results of Operations-
-Capital Resources and Liquidity".

                                9
<PAGE>
<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA
--------------------------------

    See the front page ("1998 Financial Highlights") and Page
18 ("Supplemental Financial Information") of the Company's
Annual Report to Shareholders for the year ended December 31,
1998, which is incorporated by reference herein pursuant to
Rule 12b-23 of the Act and  Instruction G(2) to Form 10-K.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 
----------------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------

    See the front page ("1998 Financial Highlights") and
Pages 8 - 10 of the Company's Annual Report to Shareholders
for the year ended December 31, 1998, which is incorporated by
reference herein pursuant to Rule 12b-23 of the Act and
Instruction G(2) to Form 10-K.

ITEM 7.A  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT 
--------------------------------------------------------
MARKET RISK
-----------

     Not applicable.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
----------------------------------------------------

    The consolidated financial statements, together with the
report thereon of PricewaterhouseCoopers LLP, dated January
27, 1999, appearing on Pages 11 - 18 , the front page ("1998
Financial Highlights") and Pages 18 - 19 ("Supplemental
Financial Data") of the accompanying 1998 Annual Report to
Shareholders of Aquarion Company are incorporated by reference
herein pursuant to Rule 12b-23 of the Act and Instruction G(2)
to Form 10-K.




ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON 
---------------------------------------------------------

ACCOUNTING AND FINANCIAL DISCLOSURE
-----------------------------------

    The registrant has nothing to report for this item.


                           PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------------------------------

    The information as to directors required by Item 10 is
set forth at Pages 1 - 7 of the Company's Definitive Proxy
Statement, dated March 15, 1999 relating to the proposed
Annual Meeting of Shareholders to be held on April 20, 1999,
filed with the Commission pursuant to Regulation 14A under the
Act, and is incorporated by reference herein pursuant to Rule
12b-23 of the Act and Instruction G(3) to Form 10-K.

Executive Officers

    The executive officers of the registrant are listed
below.  These officers were elected to the offices indicated
on April 29, 1998, except as otherwise noted, for a term
expiring with the 1999 annual meeting of directors.  Except as
indicated, all have been with registrant and its predecessors
in an executive capacity for more than five years.  There are
no family relationships among members of the executive
officers.  There were no arrangements or undertakings between
any of the officers listed below and any other person pursuant
to which he or she was selected as an officer.

                             10
<PAGE>
<PAGE>
<TABLE>
<CAPTION>

                                                           Served               
                                                            as
                       Office, Business Experience         Officer
Executive Officer  Age   During Past Five Years             Since
----------------   --- ---------------------------        -------
<S>                <C> <C>                                <C>                  
Richard K.Schmidt  54  President and Chief Executive Officer  1993
                       (since October 1995),formerly Senior
                       Vice President (1993-1995) of the
                       Company; President (1992-1995 and
                       Chief Executive Officer (since 1992
                       of IEA); formerly President and Chief
                       Operating Officer (1984-1992) of
                       Mechanical Technology, Inc.


Janet M. Hansen   56   Executive Vice President (since         1983
                       October 1995), Chief Financial
                       Officer (since April 1992), Treasurer
                       (since 1988) and Senior Vice
                       President (1993-1995) of the Company
                       and Vice President (since 1989),
                       Chief Financial Officer (since April
                       1991) and Treasurer (since 1985) of
                       BHC; Mrs. Hansen is Chairman of the
                       Board and Chief Executive Officer
                       (since April 1992) of Timco.  Mrs.
                       Hansen is also Director, Vice
                       President, Chief Financial Officer
                       and Treasurer of certain of the
                       Company's other subsidiaries.

James S. McInerney 61  Senior Vice President (since April      1989
                       1992) of the Company; President
                       (since April 1991), Chief Executive
                       Officer (since April 1995 and Chief
                       Operating Officer (January 1990 to
                       April 1995) of BHC.  Executive Vice
                       President (1990 to April 1991) of
                       BHC.  Mr. McInerney is a Director,
                       President or Vice President of
                       certain of the Company's other
                       subsidiaries.



Larry L. Bingaman  49  Vice President, Corporation Relations   1990
                       and Secretary (since April 1993);
                       Vice President, Marketing and
                       Communications (1990-1993) of the
                       Company.  Mr. Bingaman is also
                       Director, Vice President and
                       Secretary of certain of the Company's
                       other subsidiaries.

</TABLE>

ITEM 11.  EXECUTIVE COMPENSATION
--------------------------------

    Pages 1 - 8 of the Company's Definitive Proxy Statement,
dated March 15, 1999, relating to the proposed Annual Meeting
of Shareholders to be held on April 20, 1999, filed with the
Commission pursuant to Regulation 14A under the Act are
incorporated by reference herein pursuant to Rule 12b-23 of
the Act and Instruction G(3) to Form 10-K.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND 
-------------------------------------------------------------
MANAGEMENT
----------

   Pages 4 - 5 of the Company's Definitive Proxy Statement,
dated March 15, 1999, relating to the proposed Annual Meeting
of Shareholders to be held on April 20, 1999, filed with the
Commission pursuant to Regulation 14 under the Act, are
incorporated by reference herein pursuant to Rule 12b-23 of
the Act and Instruction G(3) to Form 10-K.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------

    The registrant has nothing to report for this item.

                               11
<PAGE>
<PAGE>

                           PART IV.

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS 
-------------------------------------------------------------
ON FORM 8-K
-----------

   a)   The following documents are filed as part of this report:

<TABLE>
<CAPTION>

                                                            Page in Annual 
                                                            Report*
                                                            -------------
        <S>                                                 <C>      
        (1)  Consolidated Statements of Income for the three 
             years ended December 31, 1998                        11  
            

             Consolidated Balance Sheets at December 31, 
             1998 and 1997                                        11  

             Consolidated Statements of Cash Flows for the 
             three years ended December 31, 1998                  12  
            
             Consolidated Statements of Shareholders' Equity 
             for the three years ended December 31, 1998          12  
            
             Notes to Consolidated Financial Statements        13 - 17          

             Report of Independent Accountants                    18 
            

             Selected Financial Data                           Front Page      

             Supplemental Financial Information                18 - 19          

</TABLE>

         *   Incorporated by reference from the indicated pages of the 
             1998 Annual Report to Shareholders.
                                                
                 ---------------------------
 
        (b) Reports of Form 8-K.

            The Company did not file a report on Form 8-K
            for the fourth quarter of the year ended
            December 31, 1998.

        (c) Exhibits:

            Each document referred to below is incorporated
            by reference to the files of the Commission,
            unless the reference is preceded by an asterisk
            (*).  Each management contract, compensatory
            plan or arrangement required to be filed as an
            exhibit hereto is preceded by a double asterisk
            (**).

           *3(a)  Restated Certificate of Incorporationof Aquarion, as amended.

           *3(b)   By-laws of Aquarion, as amended. 

           4(a)    Rights Agreement between Aquarion and the ChaseMellon
                   Shareholder Services, LLC, setting forth
                   description of Preferred
                   Stock Purchase Rights distributed to
                   holders of Aquarion Common Stock.  (11)

          10(a)    First Mortgage Indenture of BHC dated June 1, 1924. (2)
      
                                12
<PAGE>
<PAGE>                 


          10(b)   Seventeenth Supplemental Mortgage of BHC dated as 
                  September 1, 1960. (2)

          10(c)   Twentieth Supplemental Mortgage of BHC dated as of November 1,
                  1968. (1)

          10(d)   Loan and Trust Agreement of Timco as of November 1, 1984. (1)

          10(e)   Note Agreement of BHC dated January 24, 1991. (10)

          10(f)   Note Agreement of Aquarion dated as of May 19, 1992. (5)

          10(g)   Aquarion Long-Term Incentive Plan. (1)

          10(h)   Joint Venture Agreement between John J. Brennan, Jr.,
                  William A. Brennan and Main Street South Corporation dated
                  February 23, 1979. (3)

          10(i)  Joint Venture Agreement amendment between John J. Brennan, Jr.,
                 William A. Brennan and Main Street South Corporation dated
                 January 1, 1994. (10)

        **10(j)  Employment Agreement between Aquarion and James S. McInerney,
                 dated June 1, 1990. (4)

        **10(k)  Employment Agreement between Aquarion and Janet M. Hansen dated
                 November 1, 1992. (5)

        **10(l)  Employment Agreement between Aquarion and Jack E. McGregor
                 dated July 1, 1997.

        **10(m)  Form of Stock Option Award Agreement for options granted 
                 pursuant to Long-Term Incentive Plan. (9)

        **10(n)  Employment Agreement between Aquarion and Larry L. Bingaman
                 dated June 11, 1990. (10)

        **10(o)  Employment Agreement between Aquarion and Richard K. Schmidt
                 dated July 1, 1997.

         10(p)   Loan Agreement of BHC dated as of June 1, 1990. (4)

         10(q)   Loan Agreement of BHC dated as of June 1, 1993. (6)

         10(r)   Loan Agreement of BHC dated September 1, 1993. (7)

         10(s)   Loan Agreement of BHC dated December 1, 1993. (8)

         10(t)   Note Agreement of Aquarion dated January 4, 1994. (8)

       **10(u)   Aquarion Stock Incentive Plan. (8)
                                  
                                  13
<PAGE>
<PAGE>

        10(v)    Loan Agreement of BHC dated April 1, 1995. (10)

        10(w)    Loan Agreement of BHC dated September 1, 1996 (12)

       *10(x)    Twenty-fifth Supplemental Mortgage of BHC dated 
                 December 1, 1998

       *13(a)    Annual Report to Shareholders for the year ended 
                 December 31, 1998.

      *21(a)     Subsidiaries of Aquarion

      *23(a)     Consent of Independent Accountants

      *27(a)     Financial Data Schedule

     -------------------------                                                 

(1)   Filed as part of Aquarion's Form 8 Amendment to its
      Form 10-Q for the quarter ended September 30, 1991, filed
      February 19, 1992.

(2)   Filed as an Exhibit to BHC's Registrant Statement on
      Form S-1, File Number 2-23434, dated April 26, 1965.

(3)   Filed as part of the Amendment No. 1 to the Company's
      Registration Statement as
      Form S-7, File No. 2-74305, dated November 5, 1981.

(4)   Filed as part of the Company's Annual Report on
      Form 10-K for the year ended December 31, 1991.

(5)   Filed as part of the Company's Annual Report on
      Form 10-K for the year ended December 31, 1992.

(6)   Filed as part of the Company's Quarterly Report on
      Form 10-Q for the quarter ended June 30, 1993.

(7)   Filed as part of the Company's Quarterly Report on
      Form 10-Q for the quarter ended September 30, 1993.

(8)   Filed as part of the Company's Annual Report on
      Form 10-K for the year ended December 31, 1993.

(9)   Filed as part of the Company's Annual Report on
      Form 10-K for the year ended December 31, 1994.

(10)  Filed as part of the Company's Annual Report on
      Form 10-K for the year ended December 31, 1995.

(11)  Filed as part of the Company's Registration Statement on
      Form 8-A, file #1-8060, dated June 26, 1996.

(12)  Filed as part of the Company's Annual Report on
      Form 10-K for the year ended December 31, 1996.

                                 14

<PAGE>
<PAGE>

                          SIGNATURES
                          ----------
      Pursuant to the requirements of Section 13 or 15(d) 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.

Aquarion Company
----------------
(Registrant)

By     /S/JANET M. HANSEN                      March 23, 1999
  -------------------------------
            Janet M. Hansen
   Executive Vice President, Treasurer and
          Chief Financial Officer
 (Principal Financial and Accounting Officer)

     Pursuant to the requirements of the Securities Exchange
Act of 1934 this report has been,  signed below by the
following persons on behalf of the registrant and in the
capacities and on the dates indicated.

By       /S/GEORGE W. EDWARDS, JR .              March 23, 1999
  ---------------------------------------  
           George W. Edwards, Jr.    
     Chairman of the Board of Directors
                and Director

By            /S/RICHARD K. SCHMIDT               March 23,1999
  ---------------------------------------
                Richard K. Schmidt
      President, Chief Executive Officer
                  and Director

By            /S/JACK E. MCGREGOR                 March 23, 1999
  --------------------------------------
                Jack E. McGregor
                    Director

By        /S/GEOFFREY ETHERINGTON                 March 23, 1999
  --------------------------------------
             Geoffrey Etherington
                   Director

By          /S/JANET D. GREENWOOD                March 23, 1999
  --------------------------------------
              Janet D. Greenwood
                   Director

By          /S/EDGAR G. HOTARD                   March 23, 1999
  -------------------------------------
               Edgar G. Hotard
                   Director

By       /S/G. JACKSON RATCLIFFE                 March 23, 1999
  -------------------------------------
           G. Jackson Ratcliffe
                  Director

By          /S/JOHN A. URQUHART                  March 23, 1999
  -------------------------------------
              John A. Urquhart
                 Director
                               
By                                            March 23, 1999
  -------------------------------------
           Donald M. Halsted, Jr
                 Director
                          
                                 15
<PAGE>
<PAGE>


                        EXHIBIT 21(a)
                        -------------
                Subsidiaries of the Registrant
                ------------------------------

               -  BHC Company, incorporated in the State of Connecticut

               -  Sea Cliff Water Company, incorporated in the State of
                  New York

               -  Main Street South Corporation, incorporated in the
                  State of Connecticut

               -  Timco, Inc., incorporated in the State of Connecticut

               -  Hydrocorp, Inc., incorporated in the State of Delaware

               -  THC Acquisition Corp., incorporated in the State of
                  Delaware

               -  Aquarion Management Services, Inc., incorporated in
                  the State of Delaware

                                16
<PAGE>
<PAGE>

                        EXHIBIT 23(A)
                        -------------
              Consent of Independent Accountants
              ----------------------------------

We hereby consent to the incorporation by reference in the
Registration Statement of Form S-3 (No. 33-52973) and in the
Registration Statement on Form S-8 (No. 33-53473) and the
related prospectus of Aquarion Company of our report dated
January 27, 1999, appearing on Page 18 of the Annual Report to
Shareholders, which is incorporated by reference in the Annual
Report on Form 10-K.



PricewaterhouseCoopers LLP
New York, New York
March 23, 1999

                                  17