<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 September 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                   November 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.
<PAGE>
<PAGE 2>

Item 1.  Financial Statements

                           COMMONWEALTH GAS COMPANY

                           CONDENSED BALANCE SHEETS

                   SEPTEMBER 30, 1997 AND DECEMBER 31, 1996
                                       
                                    ASSETS

                            (Dollars in thousands)




                                                 September 30,  December 31,
                                                     1997           1996    
                                                  (Unaudited)


PROPERTY, PLANT AND EQUIPMENT, at original cost    $369,044        $358,783
  Less -  Accumulated depreciation                  109,237         102,278
                                                    259,807         256,505
  Add  -  Construction work in progress               1,866             836
                                                    261,673         257,341

CURRENT ASSETS
  Cash                                                  753             421
  Advances to affiliates                              6,300             -  
  Accounts receivable                                19,043          47,329
  Unbilled revenues                                   8,249          20,885
  Inventories, at average cost                       27,990          24,704
  Prepaid taxes -
   Income                                             9,080           5,619
   Property                                           5,747           3,061
  Other                                               1,245             981
                                                     78,407         103,000

DEFERRED CHARGES
  Regulatory assets                                  20,886          23,522
  Other                                               5,547           5,067
                                                     26,433          28,589

                                                   $366,513        $388,930












                            See accompanying notes.
<PAGE>
<PAGE 3>


                           COMMONWEALTH GAS COMPANY

                           CONDENSED BALANCE SHEETS

                   SEPTEMBER 30, 1997 AND DECEMBER 31, 1996

                        CAPITALIZATION AND LIABILITIES

                            (Dollars in thousands)



                                                 September 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                                 12,922          10,856
                                                    112,086         110,020
 Long-term debt, less current sinking
   fund requirements                                109,450          74,450
                                                    221,536         184,470
CURRENT LIABILITIES
 Interim Financing -
   Notes payable to banks                            15,000          58,200
   Advances from affiliates                             -            10,400
                                                     15,000          68,600
 Other Current Liabilities -
   Current sinking fund requirements                  3,650           3,650
   Accounts payable -
     Affiliated companies                             3,131           3,081
     Other                                           23,005          32,904
   Accrued local property and other taxes             5,960           3,060
   Other                                             20,614          18,091
                                                     56,360          60,786
                                                     71,360         129,386
 DEFERRED CREDITS
   Accumulated deferred income taxes                 39,052          37,088
   Unamortized investment tax credits and other       5,510           5,660
   Other                                             29,055          32,326
                                                     73,617          75,074

                                                   $366,513        $388,930






                            See accompanying notes.
<PAGE>
<PAGE 4>


                           COMMONWEALTH GAS COMPANY

             CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS

        FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996

                            (Dollars in thousands)
                                  (Unaudited)


                                  Three Months Ended        Nine Months Ended
                                    1997      1996          1997       1996

GAS OPERATING REVENUES            $ 41,911  $ 48,872      $235,286  $240,982

OPERATING EXPENSES
 Cost of gas sold                   28,009    32,801       136,034   137,765
 Other operation and maintenance    18,717    21,694        65,411    67,483
 Depreciation                        1,040     1,007         7,280     6,853
 Taxes -
   Income                           (3,832)   (4,081)        4,281     5,641
   Local property                      609       579         4,445     4,022
   Payroll and other                   668       377         2,632     1,893
                                    45,211    52,377       220,083   223,657

OPERATING INCOME (LOSS)             (3,300)   (3,505)       15,203    17,325

OTHER INCOME                           232       166           319       484

INCOME (LOSS) BEFORE INTEREST
 CHARGES                            (3,068)   (3,339)       15,522    17,809

INTEREST CHARGES
 Long-term debt                      1,690     1,964         5,002     5,893
 Other interest charges                896       714         2,805     2,293
 Allowance for borrowed funds
   used during construction            (33)       (8)          (65)      (27)
                                     2,553     2,670         7,742     8,159

NET INCOME (LOSS)                   (5,621)   (6,009)        7,780     9,650

RETAINED EARNINGS -
 Beginning of period                18,543    12,583        10,856    10,495
 Dividends on common stock             -      (2,856)       (5,714)  (16,427)

RETAINED EARNINGS -
 End of period                    $ 12,922  $  3,718      $ 12,922  $  3,718







                            See accompanying notes.

<PAGE>
<PAGE 5>


                           COMMONWEALTH GAS COMPANY

                      CONDENSED STATEMENTS OF CASH FLOWS

             FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996

                            (Dollars in thousands)
                                  (Unaudited)




                                                       1997           1996 

OPERATING ACTIVITIES
 Net income                                         $  7,780       $  9,650
 Effects of noncash items -
   Depreciation and amortization                       9,622          8,274
   Deferred income taxes and investment
     tax credits, net                                    793            968
 Change in working capital, exclusive of cash,
   advances to affiliates and interim financing       26,799        (15,203)
 All other operating items                            (2,254)        (4,598)
Net cash provided by (used for)
   operating activities                               42,740           (909)

INVESTING ACTIVITIES
 Additions to property, plant and equipment
   (exclusive of AFUDC)                              (11,729)        (6,316)
 Allowance for borrowed funds used
   during construction                                   (65)           (27)
 Advances to affiliates                               (6,300)           -  
Net cash used for investing activities               (18,094)        (6,343)

FINANCING ACTIVITIES
 Payment of dividends                                 (5,714)       (16,427)
 Proceeds from (payment of) short-term borrowings    (43,200)        23,475
 Payments to affiliates                              (10,400)        (1,095)
 Long-term debt issues                                35,000            -  
Net cash used for financing activities               (24,314)         5,953

Net increase (decrease) in cash                          332         (1,299)
Cash at beginning of period                              421          2,113
Cash at end of period                               $    753       $    814


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
 Cash paid during the period for:
   Interest (net of capitalized amounts)            $  6,486       $  7,190
   Income taxes                                     $  6,059       $ 11,990




                            See accompanying notes.

<PAGE>
<PAGE 6>

                           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 573 regular employees including 398 (70%) 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 September
    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.
<PAGE>
<PAGE 7>

                           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:
                                                    September 30,  Dec. 31,
                                                        1997         1996  
                                                      (Dollars in Thousands)
      Postretirement benefits costs including
        pensions                                      $ 9,866      $ 9,972
      FERC Order 636 transition costs                   7,685        9,680
      Environmental costs                               3,335        3,870
        Total regulatory assets                       $20,866      $23,522

         On April 15, 1997, the DPU issued an accounting ruling allowing the
    Company to include postretirement benefits costs in cost-of-service 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 million and $8.6 million at
    September 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
<PAGE>
<PAGE 8>

                           COMMONWEALTH GAS COMPANY

    2001.  Of that amount, $17.8 million is estimated for 1997.  As of
    September 30, 1997, the Company's actual construction expenditures
    amounted to approximately $11.8 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 major 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 nine months
 ended September 30, 1997 and 1996 and unit sales for these periods is shown
 below:

                                      Three Months            Nine Months
                                   Ended September 30,    Ended September 30,
                                      1997 and 1996          1997 and 1996  
                                             Increase (Decrease)
                                           (Dollars in thousands)

Gas Operating Revenues            $(6,961)   (14.2)%     $ (5,696)    (2.4)%

Operating Expenses -
 Cost of gas sold                  (4,792)   (14.6)        (1,731)    (1.3)
 Other operation and maintenance   (2,977)   (13.7)        (2,072)    (3.1)
 Depreciation                          33      3.3            427      6.2
 Taxes -
   Federal and state income           249      6.1         (1,360)   (24.1)
   Local property and other           321     33.6          1,162     19.6
                                   (7,166)   (13.7)        (3,574)    (1.6)

Operating Income                      205      5.8         (2,122)   (12.2)

Other Income                           66     39.8           (165)   (34.1)

Income Before Interest Charges        271      8.1         (2,287)   (12.8)

Interest Charges                     (117)    (4.4)          (417)    (5.1)

Net Income                        $   388      6.5       $ (1,870)   (19.4)

Firm Unit Sales - BBTU               (688)   (18.5)        (1,723)    (6.0)

Total Unit Sales - BBTU            (1,196)   (22.8)        (2,127)    (6.5)

     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
 September 30, 1997     4,047     3,027        525          475        20
 September 30, 1996     5,243     3,715        498          723       307

Nine Months Ended
 September 30, 1997    30,545    27,088      1,404        2,007        46
 September 30, 1996    32,673    28,811      1,394        1,676       792
<PAGE>
<PAGE 10>

                           COMMONWEALTH GAS COMPANY

Operating Revenues and Unit Sales

    Operating revenues for the third quarter of 1997 decreased approximately
$7 million or 14.2% due primarily to a 22.8% decrease in total unit sales. 
Through the first nine months of this year, operating revenues decreased $5.7
million due to a 6.5% decline in total unit sales and lower conservation and
load management (C&LM) costs ($2 million).  Revenues for the current nine-
month period also include the recognition of margins earned on off-system
contracts ($644,000).

    The decline in firm unit sales for the first nine months of 1997 reflects
decreases to all customer segments including residential (4.6%), commercial
(4.9%) and industrial (18%) that were due primarily to milder weather
experienced in this region during the first quarter as compared to a much
colder period in 1996.  Degree days for the current nine-month period totaled
4,147, 7% lower than last year and 3.5% below the normal level of 4,299.  The
significant 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 nine-month period, other operation and maintenance
decreased approximately $2.1 million due to the absence of net costs
associated with a 1996 labor dispute ($3.3 million), lower labor costs
resulting from a decrease in the number of employees ($2.3 million), lower
C&LM costs ($2 million), reduced maintenance costs relating to distribution
($1.1 million) and a decline in the provision for bad debts reflecting lower
reserve requirements ($400,000).  These decreases were offset, in part, by a
one-time charge ($6.8 million) related to a Personnel Reduction Program
initiated during the second quarter (as further discussed below) and higher
postretirement benefits costs ($1.4 million) reflecting the full recognition
of expenses and amortization of previously deferred costs associated with
postretirement benefits.

Depreciation and Taxes

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

    The $1.2 million increase in local property and other taxes for the
current nine-month period is due to an increase in payroll-related taxes
($739,000) resulting from the 1996 labor dispute and higher property tax
assessments and rates ($423,000).

Other Income and Interest Charges

    The 34.1% decrease in other income for the nine-month period reflects a
decline in interest related to deferred gas costs ($279,000) offset, in part,
by an increase in revenues associated with the Company's merchandising program
for water heaters and conversion burners ($111,000).
<PAGE>
<PAGE 11>

                           COMMONWEALTH GAS COMPANY

    Total interest charges decreased 5.1% during the current nine-month
period due to a decline in long-term interest costs ($891,000) and lower
interest charges on deferred gas costs ($914,000).  The impact of these
factors was offset by an increase in interest on short-term borrowings ($1.4
million) due to a higher average level of 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.

Long-term Financing

    On September 26, 1997, the Company issued $10 million of First Mortgage
Sinking Fund Bonds (Series L, 6.54% due 2007) and $25 million of First
Mortgage Bonds (Series M, 7.04% due 2017).  The proceeds of $35 million were
used to retire short-term debt that had been incurred to temporarily finance
additions to property, plant and equipment and for general working capital
needs.  This financing had been approved by the DPU on June 12, 1997.

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 consolidation of the
system's electric and gas operations.  The expectation is that the workforce
will be reduced by 15% to 20%.

    The PRP was offered to substantially all regular and part-time employees
of the system.  Eligibility for employees covered by collective bargaining
agreements was subject to negotiation.  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.
<PAGE>
<PAGE 12>

                           COMMONWEALTH GAS COMPANY 

    To date, approximately 13% of the Company's employees have terminated
employment with the Company as a result of 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 directed the ten Massachusetts gas utilities,
including Commonwealth Gas, to initiate a collaborative process that will
establish guiding principles and specific procedures for unbundling rates and
services for all customers.  The process has begun with meetings among the
various interested parties.  A report is scheduled to be submitted to the DPU
in mid-November.

    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 conditions 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.

    On August 18, 1997, the DPU noted that the development of unbundling
principles and procedures constitutes only a part of the effort necessary to
develop full customer choice for gas service.  The DPU recognized that each
local distribution company will be filing a comprehensive unbundling proposal
at some later date.  In the interim, the DPU directed those companies that do
not currently have unbundled rates, including Commonwealth Gas, to have such
rates in effect no later than November 1, 1998.
<PAGE>
<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
         nine months ended September 30, 1997.

    (b)  Reports on Form 8-K

         No reports on Form 8-K were filed for the three months ended
         September 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:  November 14, 1997