SETTLEMENT AGREEMENT AND RELEASE OF ALL CLAIMS
                    ----------------------------------------------

               SETTLEMENT AGREEMENT AND RELEASE OF ALL CLAIMS, hereinafter

          referred to as "Agreement and Release", made as of this 25th day

          of September, 1996 by and between Connecticut Natural Gas

          Corporation (the "Company") and Harry Kraiza, Jr. ("Kraiza").

               WHEREAS, Kraiza has been an employee of the Company since

          September 15, 1970.

               WHEREAS, the Company and Kraiza hereinafter referred to from

          time to time as the "parties" to this Agreement and Release, wish

          to mutually terminate their relationship and all prior agreements

          and understandings between them, and to settle and forever

          resolve any and all disputes, differences, and claims which may

          exist between them except as specified herein.

               NOW, THEREFORE, in consideration of the promises and mutual

          covenants contained herein, the parties have agreed and hereby

          agree as follows:

               1.   Kraiza's employment with the Company will be

          voluntarily terminated effective September 30, 1996.

               2.   Kraiza, as a terminated employee who chooses to volun-

          tarily accept the terms of this Agreement and Release, promises

          never to file any discrimination or other charges in federal or

          state court or with any federal or state administrative agency or

          sue Connecticut Natural Gas Corporation or its successors,

          assigns, subsidiaries, affiliates, present and former directors,

          officers, agents, employees, or any person acting on behalf of

          the Company, in their individual or official capacity, with<PAGE>



          respect to any matter in connection with your employment or

          separation therefrom.

               3.   The Company, in consideration of the waiver and compro-

          mise of any and all claimed contract and other alleged rights,

          including without limitation rights under the Company's benefit

          packages and personnel policies, the foregoing covenant not to

          sue and the release of all claims except as provided herein,

          shall:  

                    a.   Make a one-time, lump sum payment in lieu of six

          months' salary; that is $69,900.00 (minus applicable

          withholding).

                    b.   Pay Kraiza's monthly salary of $11,650.00 for 

          twenty-four (24) consecutive months.  The total amount of

          $279,600.00 will be made in twenty-four (24) equal monthly pay-

          ments commencing with the first regular pay day in October.  Pay-

          ment of any balance will go to Kraiza's estate in the event of

          his death.

                    c.   Upon the separation date of September 30, 1996,

          medical, dental and vision coverage will be made available to

          Kraiza at his expense (102% of the Company's cost) for 18 months

          (currently $648.96/monthly), under the terms of COBRA.  Provided

          that if Kraiza elects coverage within the prescribed election

          period, the Company will reimburse Kraiza for the actual cost of

          such coverage (including an amount reflecting the taxable portion

          of this benefit), on a monthly basis, in addition to the payments

          made under subparagraphs a and b, above.




                                         -2-<PAGE>



                    d.   The Company will pay Kraiza twenty percent (20%)

          of the current, NADA depreciated value of his Company-provided

          vehicle in exchange for the return of the vehicle.  (The current

          one hundred percent (100%) NADA value is $5,175.00.  Therefore,

          the twenty percent (20%) value is $1,035.00.)  In the

          alternative, Kraiza has the option to purchase the vehicle for

          that amount, provided that Kraiza elects to do so within 5

          working days after the effective date of the Agreement and

          Release.

                    e.   The Company will also pay Kraiza the lump sum

          amount of $2,200.00, representing the unused 1996 Executive

          Benefit.

                    f.   Kraiza's compensation under the Deferred Compensa-

          tion Plan will be paid out according to his election of

          December 26, 1995.

               4.   The Company will pay for Kraiza to utilize individual,

          executive level outplacement services.  He may utilize consulting

          and outplacement services for up to twelve months.  The Company

          will pay for the services utilized by Kraiza on a monthly basis. 

          Should Kraiza become re-employed, the Company will discontinue

          payment for outplacement services.

               5.   The Company will provide Kraiza with a letter of recom-

          mendation in a form acceptable to both Kraiza and the Company,

          and will accommodate reasonable requests for revisions or

          modifications.

               6.   Kraiza will be paid for two (2) weeks of accrued unused

          vacation, and two (2) unused floating holidays, in the amount of


                                         -3-<PAGE>



          $6,452.16.  This amount will be paid as soon as possible, but no

          later than two weeks after the separation date.

               7.   Kraiza will remain eligible for a 1996 bonus payment

          under the Annual Incentive Plan.  Kraiza is eligible for twenty-

          five percent (25%) of his current annual salary at one hundred

          percent (100%) corporate performance, subject to approval by the

          Compensation Committee.  As is customary, the corporate perform-

          ance will be determined after the close of the fiscal year. 

          Seventy percent (70%) of Kraiza's bonus will be paid to Kraiza in

          the normal course thereafter.  The remaining thirty percent (30%)

          will be deferred according to Kraiza's election under the

          Deferred Compensation Plan.

               8.   Consistent with the terms of the Plan documents, after

          Kraiza's separation date, the Collateral Assignment Agreement

          covering the Executive Life Insurance Plan (ELIP) will terminate

          on 12/31/96 (JSM, HKJR), and the Company will withdraw from the

          policy an amount equal to the aggregate premiums paid.  Kraiza

          will then have the right to continue the insurance coverage or

          surrender the policy.

               9.   All medical, dental and vision coverage, life, long-

          term disability, savings plan, pension credited service, sickness

          benefits, vacation, and holiday and other benefits and services

          available to active employees will cease as of your September 30,

          1996 separation date, except as described in the contingent offer

          under paragraph 3, above.

               10.  It is understood between the Parties that this Agree-

          ment and Release will not affect any retirement benefits due


                                         -4-<PAGE>



          Kraiza (or his wife, Susan M. Kraiza, and/or his estate). 

          Kraiza's retirement benefits are governed by the Connecticut

          Natural Gas Corporation Pension Plan.

               11.  Should any person or business with whom Kraiza seeks

          employment contact the Company for a reference regarding Kraiza,

          the Company will adhere to its existing policy of only confirming

          his employment and describing his responsibilities which he per-

          formed during his period of employment by the Company.  Further-

          more, Kraiza and the Company agree that they will not make any

          public statement which is derogatory of the other.   

               12.  Kraiza on behalf of himself and his heirs, executors,

          administrators and assigns, hereby remises, releases, and forever

          discharges the Company, and its affiliates, including but not

          limited to, Connecticut Natural Gas Corporation, their Board of

          Directors and any member of former member thereof, its employees

          and any former employee thereof, their agents and consultants,

          from any and all rights, claims, demands, controversies, damages,

          actions, causes of action, suits, judgments, promises, adminis-

          trative claims or actions, sums or money, executions and liabili-

          ties of every kind and character whatsoever, in law or in equity,

          including but not limited to any and all claims or demands aris-

          ing out of Kraiza's employment by the Company and any alleged

          employment agreement or understanding with the Company including

          any rights under Company's personnel policies, which Kraiza and

          his heirs, executors, administrators, or assigns ever had, or now

          possess, or hereafter can, shall or may have against the Company,

          and its affiliates, including but not limited to Connecticut


                                         -5-<PAGE>



          Natural Gas Corporation, their Board of Directors and any member

          or former member thereof, their employee or any former employee

          thereof, their agents, and consultants; and all such rights,

          claims demands, controversies, damages, actions, causes of

          action, suits, judgments, promises, administrative claims or

          actions, sums of money, execution and liabilities of any and

          every kind and character whatsoever, in law or in equity, as

          aforesaid, are hereby remised released, satisfied, terminated,

          and forever discharged by Kraiza on behalf of himself and his

          heirs, executors, administrators and assigns, including but not

          limited to, any claims under Title VII of the Civil Rights Act of

          1964, as amended, the Age Discrimination in Employment Act,

          S.1981 of the Civil Rights Act of 1866, as amended, the Equal Pay

          Act of 1963, the Rehabilitation Act of 1973, the Americans with

          Disabilities Act, as such laws may have been amended from time to

          time, and any other state, local, or federal equal employment

          opportunity or labor law statute, regulation, or ordinance,

          including but not limited to Conn. Gen. Stat. Section 46a-60 et

          seq., up to and including the date of this agreement.

               13.  The Company agrees to indemnify Kraiza to the extent

          permitted or required by Section 33-320a of the Connecticut

          General Statutes and the Company's Directors and Officers

          Liability Insurance policy.

               14.  Kraiza represents and agrees that he will not disclose

          the terms, amount and fact of this Agreement and Release and

          shall keep this Agreement and Release completely confidential

          except that he may discuss these matters with his immediate


                                         -6-<PAGE>



          family, his attorney, and financial advisors to insure compliance

          with Federal and State laws (i.e. taxes, unemployment compensa-

          tion) or unless required by compulsory law including but not

          limited to litigation or matters pertaining to the dissolution of

          marriage, provided they agree to keep these matters confidential

          and not disclose them to others.

               15.  This Agreement and Release contains the whole under-

          standing of the parties and supersedes all prior oral and written

          representations and agreements (including without limitation

          employee handbooks, policies, etc.) between Kraiza and the

          Company, its officers, directors, employees or former officers,

          directors or employees, staff members, agents, designees, or

          consultants, as to the subject matter hereof, and may not be

          varied except in writing executed by the parties.

               16.  All agreements, documents or instruments that are bind-

          ing on either party and are in conflict with any of the terms or

          provisions of this Agreement and Release are hereby modified and

          amended, without the requirement of any formal action to so

          modify or amend, to the same extent as if such agreements,

          documents or instruments were formally modified or amended in

          accordance with the requirements contained therein for making

          such modifications or amendments and no further action needs to

          be taken to so modify or amend them.

               17.  This Agreement and Release is entered into and shall be

          construed and performed in accordance with the laws of the State

          of Connecticut.  In the event that any one or more of the

          provisions contained in this Agreement and Release shall, for any


                                         -7-<PAGE>



          reason, be held to be invalid, illegal, unenforceable or void as

          against public policy, the same shall not affect any other

          provision of this Agreement and Release, but this Agreement and

          Release shall be construed as if such invalid, illegal,

          unenforceable or void as against public policy provision had

          never been contained herein.

               18.  The Company informs Kraiza that he has a period of at

          least twenty-one (21) days to consider this Agreement and Release

          before signing it.  He also has a seven day period after it is

          signed to revoke it.

               19.  When this Agreement and Release is signed by both

          parties, Kraiza shall take possession of this original and it

          shall remain in Kraiza's possession and control for a period of

          not less than seven (7) days.  After at least seven (7) days from

          the signing have passed, but only upon Kraiza delivering the

          fully executed original of this Agreement and Release to the

          Company, will the provisions of this Agreement and Release become

          effective.

               20.  Kraiza agrees that he has been provided this document

          and has had the opportunity to review it with counsel (if he so

          chooses) and enters into this Agreement and Release voluntarily,

          of his own free will and without coercion or undue influence. 

          For a period of seven days following the execution of this

          agreement, Kraiza may revoke this Agreement and Release.  This

          Agreement and Release shall not become effective or enforceable

          until the revocation period has expired.




                                         -8-<PAGE>



               21.  All notices, requests, demands and other communications

          hereunder must be in writing, marked "Personal & Confidential"

          and shall be deemed to have been given if delivered by hand or

          mailed within the continental United States by first class

          registered or certified mail, return receipt requested, postage

          and registry fees prepaid and addressed as follows:

                    a.   If to CNG:

                                        Connecticut Natural Gas Corporation
                                        100 Columbus Boulevard
                                        Hartford, CT 06144-1500

                                        Attention:  Victor H. Frauenhofer
                                        ---------------------------------

                    b.   If to Employee:

                                        Harry Kraiza, Jr.
                                        18 Crosswood Road
                                        Farmington, CT  06032

                              with a copy to:

                                        Soycher & Winslow, LLC
                                        120 Mountain Avenue, Suite 320
                                        Bloomfield, CT 06002

                                        Attention:  Mark S. Winslow, Esq.
                                        ---------------------------------



          PLEASE READ CAREFULLY.  THIS AGREEMENT INCLUDES A RELEASE OF ALL

          KNOWN AND UNKNOWN CLAIMS.














                                         -9-<PAGE>



          CONNECTICUT NATURAL GAS
          CORPORATION

          By:  Victor H. Frauenhofer         Harry Kraiza, Jr.
               ---------------------------    -----------------------------
               Victor H. Frauenhofer         Harry Kraiza, Jr.
               Chairman, President and CEO


          STATE OF CONNECTICUT)
                              )  ss:          25th,  September    , 1996
          COUNTY OF HARTFORD  )

               On this 25th day of September, 1996, before me appeared
          Victor H. Frauenhofer, who acknowledged himself to be the
          Chairman and President of Connecticut Natural Gas Corporation, a
          corporation, and that he, as such Chairman and President, being
          authorized to do so, executed the foregoing instrument for the
          purposes therein contained.

               In Witness Whereof, I hereunto set my hand

                                             Jean Starr-McCarthy
                                             -----------------------------
                                             Notary Public
                                             My Commission Expires:
                                                  May 31, 1999


          STATE OF CONNECTICUT)
                              )  ss:       25th,    September    , 1996
          COUNTY OF HARTFORD  )

               On this 25th day of September, 1996, before me appeared
          Harry Kraiza, Jr., known or proven to me to be the signer of the
          above document, who acknowledged to me that the same was his free
          act and deed, and that he executed the foregoing instrument for
          the purposes therein contained.

               In Witness Whereof, I hereunto set my hand

                                             Jean Starr-McCarthy
                                             -----------------------------
                                             Notary Public
                                             My Commission Expires:

                                        Sworn to and Subscribed before me
                                        this 25th day of Sept., 1996
                                        Jean Starr-McCarthy
                                             Notary Public
                                        My Commission Expires May 31, 1999
           



                                         -10-<PAGE>