<PAGE 1>


               UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                         Washington, D. C. 20549-1004

                                   Form 10-Q

(Mark One)

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

     For the quarterly period ended June 30, 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 2-1647

                           COMMONWEALTH GAS COMPANY               
            (Exact name of registrant as specified in its charter)

        Massachusetts                                        04-1989250   
(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                2,857,000 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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Item 1.  Financial Statements

                           COMMONWEALTH GAS 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    $363,672        $358,783
  Less -  Accumulated depreciation                  108,434         102,278
                                                    255,238         256,505
  Add  -  Construction work in progress               2,385             836
                                                    257,623         257,341

CURRENT ASSETS
  Cash                                                1,534             421
  Accounts receivable                                37,145          47,329
  Unbilled revenues                                   7,946          20,885
  Inventories, at average cost                       17,411          24,704
  Prepaid taxes -
   Property                                              -            3,061
   Income                                             4,739           5,619
  Other                                               1,948             981
                                                     70,723         103,000

DEFERRED CHARGES
  Regulatory assets                                  21,532          23,522
  Other                                               5,034           5,067
                                                     26,566          28,589

                                                   $354,912        $388,930













                            See accompanying notes.
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                           COMMONWEALTH GAS 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 and outstanding -
       2,857,000 shares, wholly-owned by
       Commonwealth Energy System (Parent)         $ 71,425        $ 71,425
   Amounts paid in excess of par value               27,739          27,739
   Retained earnings                                 18,543          10,856
                                                    117,707         110,020
 Long-term debt, less current sinking
   fund requirements                                 74,450          74,450
                                                    192,157         184,470
CURRENT LIABILITIES
 Interim Financing -
   Notes payable to banks                            23,325          58,200
   Advances from affiliates                           1,225          10,400
                                                     24,550          68,600
 Other Current Liabilities -
   Current sinking fund requirements                  3,650           3,650
   Accounts payable -
     Affiliated companies                             2,151           3,081
     Other                                           21,707          32,904
   Accrued local property and other taxes               899           3,060
   Other                                             36,274          18,091
                                                     64,681          60,786
                                                     89,231         129,386
 DEFERRED CREDITS
   Accumulated deferred income taxes                 38,400          37,088
   Unamortized investment tax credits and other       5,561           5,660
   Other                                             29,563          32,326
                                                     73,524          75,074

                                                   $354,912        $388,930






                            See accompanying notes.
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                           COMMONWEALTH GAS 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


GAS OPERATING REVENUES            $ 61,062  $ 68,385      $193,375  $192,110

OPERATING EXPENSES
 Cost of gas sold                   33,385    40,814       108,025   104,964
 Other operation and maintenance    26,992    23,235        46,694    45,789
 Depreciation                        1,768     1,511         6,240     5,846
 Taxes -
   Income                           (2,337)     (652)        8,113     9,722
   Local property                    1,233     1,000         3,836     3,443
   Payroll and other                   643       540         1,964     1,516
                                    61,684    66,448       174,872   171,280

OPERATING INCOME                      (622)    1,937        18,503    20,830

OTHER INCOME                            11       111            87       318

INCOME BEFORE INTEREST
 CHARGES                              (611)    2,048        18,590    21,148

INTEREST CHARGES
 Long-term debt                      1,656     1,965         3,312     3,929
 Other interest charges                926       797         1,909     1,579
 Allowance for borrowed funds
   used during construction            (21)      (13)          (32)      (19)
                                     2,561     2,749         5,189     5,489

NET INCOME (LOSS)                   (3,172)     (701)       13,401    15,659

RETAINED EARNINGS -
 Beginning of period                27,429    18,284        10,856    10,495
 Dividends on common stock          (5,714)   (5,000)       (5,714)  (13,571)

RETAINED EARNINGS -
 End of period                    $ 18,543  $ 12,583      $ 18,543  $ 12,583








                            See accompanying notes.
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                           COMMONWEALTH GAS COMPANY

                      CONDENSED STATEMENTS OF CASH FLOWS

                FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996

                            (Dollars in thousands)
                                  (Unaudited)




                                                       1997           1996 


OPERATING ACTIVITIES
 Net income                                         $ 13,401       $ 15,659
 Effects of noncash items -
   Depreciation and amortization                       7,579          6,985
   Deferred income taxes and investment
     tax credits, net                                    856            918
 Change in working capital, exclusive of cash,
   advances to affiliates and interim financing       37,285         14,276
 All other operating items                            (1,454)        (3,987)
Net cash provided by operating activities             57,667         33,851

INVESTING ACTIVITIES
 Additions to property, plant and equipment
   (exclusive of AFUDC)                               (6,758)        (3,233)
 Allowance for borrowed funds used
   during construction                                   (32)           (19)
 Advances to affiliates                                  -           (4,200)
Net cash used for investing activities                (6,790)        (7,452)

FINANCING ACTIVITIES
 Payment of dividends                                 (5,714)       (13,571)
 Payment of short-term borrowings                    (34,875)       (12,200)
 Payments to affiliates                               (9,175)        (1,850)
Net cash used for financing activities               (49,764)       (27,621)

Net increase (decrease) in cash                        1,113         (1,222)
Cash at beginning of period                              421          2,113
Cash at end of period                               $  1,534       $    891


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
 Cash paid during the period for:
   Interest (net of capitalized amounts)            $  4,855       $  3,990
   Income taxes                                     $  6,106       $  9,453







                            See accompanying notes.
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                           COMMONWEALTH GAS COMPANY

                    NOTES TO CONDENSED FINANCIAL STATEMENTS

(1) General Information

         Commonwealth Gas 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 623 regular employees including 413 (66%) who are
    represented by three collective bargaining units with agreements which
    will remain in effect until September 1998, March 2002 and June 2002.

         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.

(2) Significant Accounting Policies

         (a) Principles of Accounting

         The Company's significant accounting policies are described in Note
    2 of Notes to Financial Statements included in its 1996 Annual Report on
    Form 10-K filed with the Securities and Exchange Commission.  For interim
    reporting purposes, the Company follows these same basic accounting
    policies but considers each interim period as an integral part of an
    annual period and makes allocations of certain expenses to interim
    periods based upon estimates of revenue from firm sales for the year.

         Generally, expenses which relate to more than one interim period are
    allocated to other periods to more appropriately match revenues and
    expenses.  Principal items of expense which are allocated other than on
    the basis of passage of time are depreciation and property taxes.  These
    expenses are recorded for interim reporting purposes based upon projected
    gas revenue.  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, except for those described
    in the "Personnel Reduction Program" section under Management's
    Discussion and Analysis of Results of Operations) necessary to summarize
    fairly the results for such periods.  In addition, certain prior period
    amounts are reclassified from time to time to conform with the presenta-
    tion used in the current period's financial statements.

         The results for interim periods are not necessarily indicative of
    results for the entire year because of variations in gas consumption due
    to the heating season and also because of the Company's seasonal rate
    structure and the accrual of costs associated with the personnel
    reduction program referred to above.
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                           COMMONWEALTH GAS COMPANY

         (b) Regulatory Assets and Liabilities

         The Company is regulated as to rates, accounting and other matters
    by 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 DPU 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 or results of operations upon adoption. 
    This result may change as modifications are made to the current
    regulatory framework including utility industry restructuring efforts in
    Massachusetts.  If all or a separable portion of the Company's operations
    becomes no longer subject to the provisions of SFAS No. 71, a write-off
    of related regulatory assets and liabilities would be required, unless
    some form of transition cost recovery continues through rates established
    and collected for the Company's remaining regulated operations.  In
    addition, the Company would be required to determine any impairment to
    the carrying costs of deregulated plant and inventory assets.

         The principal regulatory assets included in deferred charges were as
    follows:
                                                       June 30,    Dec. 31,
                                                         1997        1996  
                                                      (Dollars in Thousands)
      Postretirement benefits costs including
        pensions                                      $10,123      $ 9,972
      FERC Order 636 transition costs                   8,054        9,680
      Environmental costs                               3,355        3,870
        Total regulatory assets                       $21,532      $23 522

         On April 15, 1997, the DPU issued an accounting ruling allowing the
    Company to include in cost-of-service postretirement benefits costs and
    to amortize the deferred balance of $10.5 million at March 31, 1997
    associated with these costs over a period not to exceed ten years
    beginning April 1997.

         The principal regulatory liability, reflected in deferred credits-
    other and relating to income taxes, was $8.5 and $8.6 million at June 30,
    1997 and December 31, 1996, respectively.

(3) Commitments

         Construction Program

         The Company is engaged in a continuous construction program
    presently estimated at $92 million for the five-year period 1997 through
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<PAGE 8>

                           COMMONWEALTH GAS COMPANY

    2001.  Of that amount, $17.8 million is estimated for 1997.  As of June
    30, 1997, the Company's actual construction expenditures amounted to
    approximately $6.8 million, including an allowance for funds used during
    construction.  The Company expects to finance these expenditures on an
    interim basis with internally-generated funds and short-term borrowings
    which are ultimately expected to be repaid with the proceeds from the
    issuance of long-term debt and/or equity securities.

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

                           COMMONWEALTH GAS 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 is shown below:
                                      Three Months            Six Months
                                      Ended June 30,         Ended June 30,
                                      1997 and 1996          1997 and 1996  
                                             Increase (Decrease)
                                           (Dollars in thousands)

Gas Operating Revenues            $(7,323)   (10.7)%     $  1,265      0.7 %

Operating Expenses -
 Cost of gas sold                  (7,429)   (18.2)         3,061      2.9
 Other operation and maintenance    3,757     16.2            905      2.0
 Depreciation                         257     17.0            394      6.7
 Taxes -
   Federal and state income        (1,685)  (258.4)        (1,609)   (16.6)
   Local property and other           336     21.8            841     17.0
                                   (4,764)    (7.2)         3,592      2.1

Operating Income                   (2,559)  (132.1)        (2,327)   (11.2)

Other Income                         (100)   (90.1)          (231)   (72.6)

Income Before Interest Charges     (2,659)  (129.8)        (2,558)   (12.1)

Interest Charges                     (188)    (6.8)          (300)    (5.5)

Net Income                        $(2,471)  (352.5)      $ (2,258)   (14.4)

Firm Unit Sales - BBTU                (98)    (1.4)        (1,035)    (4.1)


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

          Unit Sales - In Billions of British Thermal Units (BBTU)

                                                          Off-       Quasi-
                       Total      Firm   Interruptible   System       Firm 
Three Months Ended
  June 30, 1997         7,990     6,804        428          735        23
  June 30, 1996         8,506     6,902        539          704       361

Six Months Ended
  June 30, 1997        26,498    24,061        879        1,532        26
  June 30, 1996        27,430    25,096        896          953       485
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<PAGE 10>

                           COMMONWEALTH GAS COMPANY

Operating Revenues and Unit Sales

    For the first six months of 1997, operating revenues showed a slight
increase of approximately $1.2 million due primarily to an increase in the
cost of gas sold offset by lower conservation and load management (C&LM) costs
($2.1 million).  During the current quarter, operating revenues decreased $7.3
million or 10.7% due primarily to a $7.4 million decrease in the cost of gas
sold reflecting declines in both firm and non-firm unit sales.  Revenues for
both the current quarter and year-to-date period also include the recognition
of margins earned on off-system contracts ($644,000).

    The decline in firm unit sales for the first half of 1997 reflects
decreases to all customer segments including residential (3.4%), commercial
(4.3%) and industrial (10.4%) that were due primarily to milder weather
experienced in this region as compared to a much colder period in 1996. 
Degree days for the current six-month period totaled 3,933, 7.3% lower than
last year and 3.6% below the normal level of 4,081.  For the current quarter,
degree days were 3.6% higher than the 1996 total of 934 due to a slightly
cooler than average Spring.  The fluctuations in non-firm sales for both the
current quarter and year-to-date period reflect the competitive environment
that currently exists in the natural gas industry.  A portion of the margin
realized on these sales reduces the cost of gas sold to firm customers.

Other Operation and Maintenance

    For the current quarter, other operation and maintenance increased $3.8
million or 16.2% due to one-time costs ($6.8 million) related to a Personnel
Reduction Program (PRP) initiated during the current quarter (as further
discussed below).  The impact of the PRP was offset somewhat by the absence of
costs related to the 1996 labor dispute ($1.7 million) and lower C&LM costs
($1.3 million).

Depreciation and Taxes

    Depreciation expense increased during the current six-month period and
the current quarter due to higher levels of depreciable plant-in-service.  The
change in federal and state income taxes in both periods reflects the lower
level of pretax income.

    The 17% increase in local property and other taxes for the current six-
month-period is due to an increase in state unemployment taxes ($448,000)
related to the 1996 labor dispute and higher property tax assessments and
rates ($393,000).

Other Income and Interest Charges

    The decrease in other income for both the current quarter and six-month
period reflects a decline in revenues associated with the Company's
merchandising program for water heaters and conversion burners and interest
related to deferred gas costs.

    Total interest charges decreased 5.5% during the current six-month period
due to lower interest charges on deferred gas costs ($769,000) and a decline
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                           COMMONWEALTH GAS COMPANY

in long-term interest costs ($617,000).  The impact of these factors was
offset by an increase in interest on short-term borrowings ($1.1 million) due
to a higher average level of short-term borrowings.

Environmental Matters

    The Company is participating in the assessment of a number of former
manufactured gas plant (MGP) sites and alleged MGP waste disposal locations to
determine if and to what extent such sites have been contaminated and whether
the Company may be responsible for remedial actions.  In April, the Company
recorded an additional liability and corresponding regulatory asset of $1.2
million due to an increase in the site clean-up cost estimate for an MGP site
for which the Company was previously cited as a Potentially Responsible Party. 
The DPU has approved recovery of costs associated with MGP sites.  The Company
is also involved in certain other known or potentially contaminated sites
where the associated costs may not be recoverable in rates.  For further
information on other related environmental matters, refer to the Company's
1996 Annual Report on Form 10-K.

Proposed Long-term Financing

    On June 12, 1997, the Company received approval from the DPU for a
proposed financing plan which includes $35 million of long-term debt.  The
proceeds from this financing, which is expected to be completed in the third
quarter, will be used to retire short-term debt incurred for the purpose of
temporarily financing additions to property, plant and equipment and for
general working capital needs.

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%.

    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.
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<PAGE 12>

                           COMMONWEALTH GAS COMPANY 

    Currently, approximately 14% of the Company's employees have applied for
the PRP.  The Company estimates that the cost of termination benefits as
described above, including a portion of costs for certain affiliates will
approximate $6.8 million which was recorded in the second quarter and had an
after-tax income impact of $4.1 million.  The payback period is expected to be
less than one year.

Gas Industry Restructuring

    On July 18, 1997, the DPU requested that the Massachusetts gas utility
industry initiate a statewide restructuring.  The ten utilities, including
Commonwealth Gas, are directed to begin a collaborative process that will
establish guiding principles and specific procedures for unbundling rates and
services for all customers.  The process is required to begin on or before
August 15, 1997 and a report is to be submitted to the DPU no later than
November 15, 1997.

    The DPU listed six principles that it considers important to the success
of a competitive natural gas market that will provide safe and reliable
service at the lowest possible cost to customers.  The natural gas market
would: (1) provide the broadest possible choice; (2) provide all customers
with an opportunity to share in the benefits of increased competition; (3)
ensure full and fair competition in the gas supply market; (4) functionally
separate supply from local distribution services; (5) support and further the
goals of environmental regulation; and lastly (6) rely on incentive regulation
where a fully competitive market cannot or presently does not exist.

    In addition, the DPU outlined several specific issues that it expects the
collaborative to address: (1) services that can be offered on a competitive
basis; (2) terms and condition of service; (3) consumer protections and social
programs; (4) mitigation of gas-related and non-gas related transition costs;
(5) third-party supplier qualifications; and (6) curtailment principles.  The
DPU also suggested that the collaborative reconsider the pricing and provision
of interruptible transportation services.
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<PAGE 13>

                           COMMONWEALTH GAS COMPANY

                          PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

         The Company is not a party to any pending material legal proceeding.

Item 5.  Other Information

         None

Item 6.  Exhibits and Reports on Form 8-K

    (a)  Exhibits

         Exhibit 27 - Financial Data Schedule

         Filed herewith as Exhibit 1 is the Financial Data Schedule for the
         six months ended June 30, 1997.

    (b)  Reports on Form 8-K

         No reports on Form 8-K were filed for the three months ended June
         30, 1997.
<PAGE>
<PAGE 14>

                           COMMONWEALTH GAS 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.



                                          COMMONWEALTH GAS COMPANY
                                                (Registrant)


                                          Principal Financial and
                                          Accounting Officer:


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




Date:  August 14, 1997