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, 1996
                                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 0-493

                     CONSUMERS WATER COMPANY
       ----------------------------------------------------
      (Exact name of registrant as specified in its charter)

                   Maine                       01-0049450
       --------------------------------      --------------------
       (State or other jurisdiction           (I.R.S. Employer
        ofincorporation or organization)       Identification No.)

    THREE CANAL PLAZA, PORTLAND, MAINE   04101  (207-773-6438)
   -----------------------------------------------------------
  (Address and telephone number of principal executive offices)

                               NONE
    ----------------------------------------------------------
   (Securities registered pursuant to Section 12(b) of the Act)

             COMMON SHARES, PAR VALUE $1.00 PER SHARE
             (Title of class of Securities registered
              pursuant to Section 12(g) of the Act)
_______________________________________________________
          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 registrant was required to file such reports), and (2) has been 
subject to such filing requirements for the past 90 days.

                     Yes   XXX      No      
                         ------         ------
          Indicate by a 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 III of this Form 
10-K or any amendment to this Form 10-K    X     .
                                         -------
     The aggregate market value of all voting shares held by non-affiliates 
as of March 7, 1997 was $156,365,714. As of March 7, 1997, there 
were 8,809,336  Common Shares outstanding.

Documents Incorporated by Reference
     The "Nominees for Election as Directors", "Other Executive Officers",
"Executive Compensation," and "Common Stock Ownership of Certain Beneficial
Owners and Management" sections of the registrant's proxy statement for its 
1997 annual meeting filed pursuant to Regulation 14A are incorporated in 
Part III of this Form 10-K by reference.

                              PART I
------------------
ITEM 1.  BUSINESS
------------------

     Consumers Water Company (Consumers or the Company) is a holding and 
management company whose principal business is the ownership and operation 
of water utility subsidiaries.  Consumers owns directly or indirectly at 
least 90% of the voting stock of 8 water companies (the Consumers Water 
Subsidiaries) which operate 28 divisions providing water service to 
approximately 228,000 customers in six states.  The Company also owns 100% 
of Consumers Applied Technologies, Inc. (CAT), which provides services 
primarily in the areas of meter installation, corrosion engineering, contract
operations and water conservation.  At the end of 1996, the Company took a 
$2.4 million after tax charge to consolidate some operations to its Southeast
Region and to exit two business lines that were unprofitable and no longer 
fit within CAT's strategic plans.  The restructuring eliminated the 
Mid-Atlantic and the New England regions of CAT. 

     Consumers was incorporated under the laws of Maine in 1926.  The 
address of its executive offices is Three Canal Plaza, Portland, Maine 
04101, and the Company's telephone number is (207) 773-6438.

     The Company had at December 31, 1996, subsidiaries as noted on Exhibit 
21 attached hereto, the accounts of which are included in the consolidated
financial statements in this report. 

Consumers Water Subsidiaries

     The Consumers Water Subsidiaries operate 28 divisions in six states 
for the collection, treatment and distribution of water for public use 
to residential, commercial and industrial customers, to other water 
utilities for resale and for private and municipal fire protection 
purposes.  In 1996, 65% of the revenue of the Consumers Water Subsidiaries 
was generated from residential accounts while sales for commercial 
users, industrial users, fire protection and miscellaneous uses accounted 
for 13%, 8%, 8%,  and 6% of revenues respectively.  Water utility revenues 
for the three years ended December 31, 1996, 1995 and 1994 were $93,587,000,
$89,143,000, and $80,376,000 respectively.  At December 31, 1996, the
Consumers Water Subsidiaries owned in the aggregate 3,381 miles of mainline
pipe of which approximately 84% was 6-inches or larger in diameter.  

     Of the 28 divisions, 14 use primarily surface supplies (lakes, 
ponds, rivers and streams) as their source of supply; 12 obtain 
water principally or entirely from wells; and 2 purchase their supplies 
from adjacent systems. Less than 5% of the Consumers Water Subsidiaries' 
water usage is purchased from other systems.  In general, the 
Company considers the surface and well supplies at the Consumers 
Water Subsidiaries to be adequate for anticipated average daily demand and 
normal peak demand. 

     All of the systems (except one system serving solely industrial users 
in Ohio and a few small developer built systems in New Hampshire) 
provide customers with water which has been subjected to 
disinfection treatment and some of which has been subjected to 
additional treatment such as softening, sedimentation, filtration, 
chemical stabilization, iron and/or manganese removal and taste and 
odor control.  Nine systems own and operate full scale water treatment plants. 
In addition, Consumers Illinois Water Company (Consumers Illinois) operates 
4 wastewater treatment facilities. 

     The water treatment, pumping and distribution capacities of the 
systems are generally considered by management to be adequate to meet 
the present requirements of residential, commercial and industrial 
customers.  On a continuing basis, the Consumers Water Subsidiaries 
make system improvements and additions to capacity in response to 
changing regulatory standards, changing patterns of consumption and 
increases in the number of customers.  See "Environmental 
Regulation."  Operating and capital costs associated with these 
improvements are normally recognized by the various state regulatory
commissions in setting rates.  See "Rate Regulation."

     Consumers' water utility business is seasonal because the demand 
for water during the warmer months is generally greater than during the 
cooler months due to additional requirements for industrial and 
residential cooling systems, private and public swimming pools and 
lawn sprinklers. 

     The following table indicates, for each of the Consumers Water
Subsidiaries, the number of customers, revenues and net utility plant 
as of December 31, 1996:
                                                               
                            Number      Number of    Utility    Net Utility
Subsidiary               of Divisions   Customers    Revenue     Plant (1) 
----------------------------------------------------------------------------
                                                     (Dollars in Thousands)
              
Consumers Ohio 
  Water Company                5          73,659      $29,572     $119,424
Consumers Illinois 
  Water Company                7          58,935       20,581       97,456
Consumers Pennsylvania 
  Water Company--
    Shenango Valley 
      Division (2)              1          18,641       7,768       28,939
    Roaring Creek Division      1          17,664       8,570       37,009
    Susquehanna Division        1           4,543       1,588        6,134
Consumers New Jersey 
  Water Company                 3          30,694      11,575       56,127
Consumers New Hampshire 
  Water Company                 1            8,018      6,369       32,387
Consumers Maine 
  Water Company                 9           15,538      7,564       30,173
Inter-Company Eliminations      -              -           -        (3,424)
                               --------------------------------------------
                                28          227,692    $93,587    $404,225
_________________________________
(1)  Includes construction work in progress.
(2)  Includes Masury Water Company, wholly-owned by the Shenango Division.

The properties of the Consumers Water Subsidiaries consist of transmission 
and distribution mains and conduits, purification plants, pumping 
facilities, wells, tanks, meters, supply lines, dams, reservoirs, 
buildings, land, easements, rights and other facilities and equipment used 
for the collection, purification, storage and distribution of 
water.  Substantially all of the property and all rights and franchises of 
the Consumers Water Subsidiaries are owned by the subsidiaries and are 
subject to liens of mortgages or indentures.  For the most part, such liens
are imposed to secure bonds, notes and/or other evidences of 
long-term indebtedness of the respective companies.  Management considers 
that the Consumers Water Subsidiaries' water collection, treatment and
distribution systems, facilities and properties are well maintained and
structurally sound. In addition, Consumers carries replacement cost 
insurance coverage on substantially all of its and its subsidiaries'
above-ground properties, as well as liability coverage for risks incident 
to their ownership and use.

RATE REGULATION

The Consumers Water Subsidiaries are subject to regulation by their 
respective state regulatory bodies.  The state regulatory bodies have 
broad administrative power and authority to regulate water and other 
public utilities, including the power to regulate rates and charges, 
service and the issuance of securities.  They also establish uniform 
systems of accounts, develop standards with respect to groundwater 
withdrawal rights, surface water supply, potability and adequacy of 
treatment, approve the terms of contracts and relations with affiliates 
and customers, purchases and sales of property and loans. 

The profitability of the operations of the Consumers Water Subsidiaries 
is influenced to a great extent by the timeliness and magnitude of rate
allowances by regulatory authorities in various states.  Accordingly,
Consumers maintains a rate case management capability to ensure that 
the tariffs of the Consumers Water Subsidiaries reflect, to the extent
possible, current costs of operations, capital, taxes, energy, materials 
and compliance with environmental regulations.  This process also 
addresses other factors bearing on rate determinations, such as the 
quantity of rainfall and temperature in a given period of time, system
expansion and industrial demand. 

The approximate amount of annual rate increases allowed for the last three
years was $4,510,000 for 1996, $6,938,000 for 1995, and $5,624,000 for 
1994, represented by eight, six, and ten rate decisions, respectively. 

The Company currently has four rate filings pending totaling $2.8 million 
of requested annualized new revenue.  Decisions on these cases are 
expected during 1997. 

Rates for some divisions of Consumers Ohio Water Company (Consumers Ohio) 
are fixed by negotiated agreements with the political subdivisions that 
are served, instead of through a filing with the Public Utility Commission 
of Ohio.  Currently, two of the four regulated divisions of Consumers Ohio 
are operating under rate ordinances. 

WATER UTILITY COMPETITION

In general, the Company believes that the Consumers Water Subsidiaries 
have valid operating rights, free from unduly burdensome restrictions,
sufficient to enable them to carry on their businesses as presently 
conducted.  They derive their rights to install and maintain mains in 
streets, highways and other public places, from the acts under which 
they were incorporated, municipal consents and ordinances, permits 
granted for an indefinite period of time by states and permits from 
state highway departments and county and township authorities.  In most
instances, such operating rights are non-exclusive.  In certain cases,
permits from state highway departments and county and township 
authorities have not been received for service in unincorporated areas, 
but service is being rendered without assertion or lack of authority by 
the governmental body concerned.

Each of the Consumers Water Subsidiaries serves an area or areas in which 
it is sole operator of the public water supply system.  In some instances
another water utility provides service to a separate and sometimes 
contiguous area within the same township or other political subdivision 
served by one of the Consumers Water Subsidiaries.

In the states in which the operations of the Consumers Water Subsidiaries 
are carried on, there exists the right of municipal acquisition by one or 
more of the following methods:  eminent domain, the right of purchase given 
or reserved by a municipality or other political subdivision in granting a
franchise, and the right of purchase given or reserved under the law of 
the state in which the subsidiary was incorporated or from which it 
received its permit.  The price to be paid upon acquisition is usually
determined in accordance with both federal law and the laws of the state
governing the taking of lands or other property under eminent domain 
statutes; in other instances, the price may be negotiated, fixed by
appraisers, selected by the parties or computed in accordance with a 
formula prescribed in the law of the state or in the particular franchise 
or special charter.  The Company has sold five divisions, with customers
totaling approximately 15,000 under threat of eminent domain in the last
several years.  The gain on those sales totaled over $7 million.  The 
Company is working with the local communities in its service areas in an
effort to prevent future eminent domain proceedings.

ENVIRONMENTAL REGULATION

The primary federal laws affecting the provision of water and wastewater
treatment services by the Consumers Water Subsidiaries are the Clean Water 
Act (the CWA), the Safe Drinking Water Act (the SDWA) and the regulations
promulgated pursuant thereto by the United States Environmental Protection
Agency (the EPA), as well as federal and state regulations affecting dams. 
These laws and regulations establish criteria and standards, including 
those for drinking water and for liquid discharges into waters of the 
United States.  The States have the right to establish criteria and 
standards stricter than those established by the EPA, and some of the 
states in which the Consumers Water Subsidiaries operate have done so. 
Numerous federal and state environmental laws other than the SDWA,
the CWA and Dam Safety Regulations, affect the operations of the Consumers
Water Subsidiaries.

The Federal SDWA established uniform minimum national quality standards for
drinking water.  EPA regulations promulgated pursuant to the SDWA set
standards on the amount of certain inorganic and organic chemical
contaminants, microbials and radionuclides in drinking water.  The Federal
1996 Safe Drinking Water Act Amendments require the EPA to put more emphasis
on the benefits versus costs of compliance when considering new or stricter
finished water quality criteria and standards.  Stricter drinking water
standards currently under consideration may result in additional capital
expenditures being required by the Company's water subsidiaries.  
Estimated capital costs for the projects described below are in
1997 dollars. 

In order to eliminate and/or inactivate microbials in the finished water,
improved disinfection and/or filtration is required under the EPA Surface
Water Treatment Rule (SWTR) adopted pursuant to the SDWA.  Most necessary
improvements to comply with the SWTR have been completed.  Improvements
continue at three operations.  The estimated cost for 1997 and beyond to
comply with the SWTR, replace aged infrastructure, increase capacity and
address other SDWA items is estimated at $32 million.  Costs related to
dealing with future regulations for the removal and/or inactivation of
microbials such as cryptosporidium cannot be estimated at the present 
time.

Two of the Consumers Water Company Subsidiaries have unfiltered surface
supplies pursuant to exemptions granted from the filtration requirement 
of the SDWA.  If filtration were required in the future, an additional
expenditure of $6 million would be necessary.  Two of the Consumers 
Water Subsidiaries operations have groundwater that might be found to be 
under the influence of a surface supply which could require filtration at 
an estimated cost of $9 million. 

The Disinfectants/Disinfection By-Products Rule (D/DBP) adopted under 
the SDWA is expected to affect four Consumers Water Company operations.  
The cost to comply with Stage I and Stage II of this rule is expected 
to be $3 to $9 million.  However, most of the necessary improvements 
will be for Stage II compliance and will occur after 2002.

An enhanced Surface Water Treatment Rule (ESWTR) is anticipated to 
be proposed by the EPA in late 1998 or early 1999.  A portion of the 
capital investment indicated for compliance with the D/DBP Rule is 
expected also to meet a portion of the ESWTR requirements.  Additional 
capital investment for ESWTR compliance cannot be estimated until the 
actual rule is in place.

The EPA has not yet established the Maximum Contaminant Level (MCL) for 
radon in drinking water pursuant to the SDWA provisions applicable to
radionuclides.  The Company anticipates the EPA will set the standard 
at 1,000 pico curies/liter, as proposed by an industry group, and the
necessary capital expenditures will be approximately $3 million to occur 
after 2000.

Existing water treatment facilities in Midwest farming areas may have to 
be modified or improved to reduce herbicides and pesticides if elevated 
levels are found in the finished water.  The capital cost of 
these modifications and improvements, if required, are estimated at 
$8 million. 

In 1992, Consumers Illinois executed a Letter of Commitment with the 
Illinois Environmental Protection Agency to comply with the MCL for 
nitrates at its Vermilion Division by 1997 and to take additional 
interim steps to address the problem.  The Vermilion Division will be 
required to add treatment facilities and/or new sources of supply to 
reduce the level of nitrates in its finished water at certain times of 
the year for an estimated total project cost of $8 million.  Due to 
project delays, it is anticipated the 1997 compliance date will be extended 
by the IEPA. 

The Consumers Water Subsidiaries own 10 major dams that are subject to 
the requirements of the Federal and State regulations related to dam 
safety.  Most dams undergo a comprehensive engineering inspection 
annually.  The Company believes the dams are structurally sound and 
well maintained. 

The CWA regulates the discharge of effluents from drinking water 
and wastewater treatment facilities into the lakes, rivers, 
streams, subsurface or sanitary sewers.  Ten of the systems owned by 
the Consumers Water Subsidiaries generate water treatment precipitate 
from operating conventional filtration facilities used for producing 
drinking water.  The water treatment precipitate is a combination of silt 
and chemicals used in the treatment process and chemicals removed from the 
raw water.  For each of the ten facilities, the water treatment 
precipitate generated from the treatment facilities is disposed of either 
in a storage facility such as a lagoon owned by the subsidiary, an 
off-site facility not owned by the subsidiary, a State approved landfill,
municipal sewer system or it is used for agricultural land application. 
Wastewater precipitate generated from a small wastewater treatment 
facilities in Illinois is used as a soil additive.  Additional capital
expenditures and operating costs in connection with the management and
ultimate disposal of wastewater effluent from water and wastewater 
facilities may be required in the future, particularly if changes are
made in the requirements of the CWA or other applicable federal or state 
laws.

At Consumers Illinois, a new wastewater plant is now serving the 
Candlewick area.  Pursuant to a settlement agreement entered into with 
a Homeowners Association in an area served by the Candlewick treatment 
plant, Consumers Illinois has agreed to study the possible relocation of 
the  effluent discharge from the facility.  As a result, the location of 
the discharge may be changed at an estimated cost of up to $0.5 
million. 

The Struthers Filtration Plant, which is operated by Consumers Ohio, has 
been disposing of treatment precipitate at an inactive strip mine.  The 
Ohio Environmental Protection Agency has informed Consumers Ohio that it 
must find an alternative method of disposal for the treatment 
precipitate.  This issue is being studied and the cost for an 
alternative disposal method is estimated at $0.5 to 1.0 million.

Numerous federal and state environmental laws other than the SDWA, the 
CWA and Dam Safety Regulations, affect the operations of the Consumers 
Water Subsidiaries.

In addition to the capital expenditures and costs currently 
anticipated, changes in environmental regulations, enforcement policies 
and practices or related matters may result in additional capital 
expenditures and costs.  Capital expenditures and costs required as a 
result of water quality standards and environmental requirements 
generally have been  recognized by state public utility commissions as
appropriate plant additions in establishing rates.

WATER SUBSIDIARY INFORMATION

Consumers' five largest water subsidiaries, Consumers Ohio, 
Consumers Illinois, Consumers New Jersey Water Company (Consumers New 
Jersey), Consumers Pennsylvania -- Shenango Valley Division (Shenango) 
and Consumers Pennsylvania -- Roaring Creek Division (Roaring 
Creek), accounted for approximately 83% of consolidated operating revenues 
of the water subsidiaries in 1996 and 84% of consolidated water utility 
net property, plant and equipment at December 31, 1996.  Consumers' five
largest water subsidiaries are discussed separately below.

CONSUMERS OHIO  Consumers Ohio is the largest of the Consumers 
Water Subsidiaries, accounting for approximately 32% of the operating 
revenues of the water subsidiaries in 1996.  As of December 31, 
1996, Consumers Ohio operates five separate systems, four of which 
deliver treated water and one of which delivers partially treated 
water primarily to industrial customers.  Consumers Ohio serves portions 
of Ashtabula, Lake, Stark, Summit and Mahoning counties, in northeastern 
Ohio.  

The following indicates the distribution of 1996 year-end customers, 
revenues and net utility plant among the five divisions of Consumers Ohio.

                                  Number of     Utility       Net Utility
                                  Customers     Revenues        Plant   
--------------------------------------------------------------------------
                                                 (Dollars in Thousands)

Lake Erie East Division            7,579        $ 3,409        $11,646
Lake Erie Division                26,508          8,936         38,759
Stark Regional Division           24,590         10,433         44,364
Struthers Division                14,972          6,256         23,181
Mahoning Valley Division              10            538          1,474
                                  -------------------------------------
     Totals                       73,659       $ 29,572      $ 119,424

CONSUMERS ILLINOIS  Consumers Illinois serves 49,007 water customers in 
the City of Kankakee, Village of Bourbonnais, and a portion of the Village 
of Bradley, as well as unincorporated areas of Kankakee, Bourbonnais, 
Aroma, Limestone, and Manteno Townships, all in Kankakee County; the Cities 
of Danville, Tilton, Westville and Catlin as well as the communities of 
Lake Boulevard and Hooton, all in Vermilion County, the Village of 
University Park and unincorporated areas of Crete and Monee Townships in 
Will County, and portions of Lee, Boone and Knox Counties, all in the state 
of Illinois.  

Consumers Illinois also serves 9,928 sewer customers in the Village 
of University Park, portions of Crete and Monee Townships in Will County, 
and portions of Lee and Boone Counties, all in the state of Illinois. 
Consumers Illinois obtains its water supply for its customers in 
Kankakee County from the Kankakee River and satellite wells while 
its customers in Vermilion County are supplied from Lake Vermilion.  In 
Will, Lee, Boone and Knox counties, its customers are supplied from deep 
well systems.  The economy of the Company's service areas is based 
on agriculture and diverse light industries.  Consumers Illinois' net 
utility plant at December 31, 1996, and utility revenues for 1996 
were $97,456,000 and $20,581,000, respectively.  

CONSUMERS NEW JERSEY   Consumers New Jersey operates three divisions in 
New Jersey which serve 30,694 customers in  territories which are not
contiguous.  Each district draws its water from deep high capacity wells.  
The Southern Division serves a growing residential area, primarily in 
Camden County.  The Central Division serves a growing residential area 
that also includes a small amount of light industry and agriculture, 
primarily in Mercer County.  The Northern Division serves an industrial 
and agricultural community and outlying municipalities, primarily in 
Warren County, that are experiencing modest growth.  Consumers New Jersey's
net utility plant at December 31, 1996, and utility revenues for 1996 were
$56,127,000 and $11,575,000 respectively. 

SHENANGO      Shenango and its wholly-owned Ohio subsidiary, Masury 
Water Company, which draws its water from the Shenango River, serve 
18,641 residential, commercial, industrial and wholesale customers in 
the cities of Sharon and Farrell, the boroughs of Wheatland, New 
Wilmington and West Middlesex, and portions of Hermitage, Mercer, Pulaski 
and Shenango Townships, all in Pennsylvania, and Trumbull County, Ohio.  
The economy of the area is largely based on heavy industrial 
manufacturing.  Shenango's net utility plant at December 31, 1996, and 
utility revenue for 1996 were $28,939,000 and $7,768,000 respectively.

ROARING CREEK    Roaring Creek, which draws its water from a 12,000 
acre watershed, serves 17,664 residential, commercial, and 
industrial customers in the City of Shamokin and other portions 
of Northumberland, Columbia and Schuylkill Counties, all in Pennsylvania.  
The economy of the area is based on light industrial and service 
oriented employment.  Roaring Creek's net utility plant at December 
31,1996, and utility revenue for 1996 were $37,009,000 and 
$8,570,000, respectively. 

UTILITY SERVICES

    CAT is a nationwide water resource management service provider 
primarily, in meter installations, environmental engineering, 
corrosion engineering, contract operations, and water conservation 
services.  Services were provided to municipalities, government, and 
private industry.  These services were provided by three regional 
profit centers: the New England Region with offices in Connecticut 
and Massachusetts, the Mid-Atlantic Region with offices in New Jersey 
and Ohio, and the Southeast Region with an office in Florida.  Total 
revenues were $13,796,000 in 1996.

At the end of 1996, CAT took a $2.4 million after tax charge to 
consolidate some operations into its Southeast Region and to exit two 
business lines that were unprofitable and no longer fit within its 
strategic plans.   The restructuring will eliminate the Mid-Atlantic and 
the New England Regions.  The Corporate office will remain in Connecticut.

In 1997, the Southeast Region will provide water management services, 
meter installations, and submetering installations.  Total revenues 
for the Southeast Region in 1996 were $4,097,000.

In 1997, the Corporate office will manage the contract operations 
and maintenance business and concentrate on opportunities to expand 
the business.  Total revenues from contract operations and maintenance in 
1996 were $1,264,000.  The primary contract operation was at Merrill 
Creek  where CAT provides operation and management staff for a pumped 
storage and recreation facility.  This contract expires at the end of 1997 
and is currently being renegotiated.

EMPLOYEES

Consumers Water Company and its subsidiaries employed 617 people as 
of December 31, 1996, of which 444  were employed by the Consumers 
Utility Subsidiaries.  Non-supervisory personnel at the Consumers 
Water Subsidiaries in Ohio, Pennsylvania and Illinois are covered 
by collective bargaining agreements.  Employee relations are considered 
by management to be satisfactory throughout the Company.

FOREIGN OPERATIONS

   The Company had no foreign operations or export sales in 1996.

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

     (a)  Description

See Item 1. "Consumers Water Subsidiaries" for description of Consumers'
principal properties and encumbrances thereon.

Consumers' properties are located as follows:

     Illinois

     (1) Consumers Illinois Water Company with seven divisions in Kankakee,
         Danville, University Park, Sublette, Oak Run, Willowbrook and
         Candlewick, Illinois.

     Ohio

     (2) Consumers Ohio Water Company with corporate offices in Poland and
         five operating divisions located in Massillon, Struthers, Mahoning
         Valley, Geneva and Mentor, Ohio.

     (3) Masury Water Company located in Trumbull County, Ohio.

     Pennsylvania

     (4) Consumers Pennsylvania Water Company -- Susquehanna Division 
         located in Sayre, Pennsylvania 

     (5) Consumers Pennsylvania Water Company -- Shenango Valley Division
         located in Sharon, Pennsylvania.

     (6) Consumers Pennsylvania Water Company -- Roaring Creek Division
         located in Shamokin, Pennsylvania.

     New Jersey

     (7) Consumers New Jersey Water Company with corporate offices in 
         Hamilton and operating divisions in Blackwood, Hamilton Square 
         and Phillipsburg, New Jersey.

     Connecticut

     (8) Consumers Applied Technologies, Inc. headquartered in Wallingford,
         Connecticut with regional offices in Massachusetts, New Jersey, 
         and Florida.  In 1997, CAT is consolidating its offices to offices 
         in Connecticut and Florida.

     (9) EnviroAudit, Ltd. located in Wallingford, Connecticut.
     
     New Hampshire

     (10) Consumers New Hampshire Water Company located in Londonderry, 
          New Hampshire.                 
     
     Maine

     (11) Consumers Maine Water Company with nine divisions located in 
          Kezar Falls, Freeport, Oakland, Rockport, Skowhegan, Greenville,
          Hartland, Bucksport and Millinocket, Maine.

     (12) Consumers' corporate headquarters located in Portland, Maine.

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

     Various environmental orders and policies affecting the Consumers 
Water Subsidiaries are described above under the caption "Environmental
Regulation."

(a)  Ohio Water Mercury Spill.  In March, 1993, A.P. O'Horo Company, 
an outside contractor (the "Contractor"), spilled a small amount of 
mercury while working at a water treatment plant owned and operated 
by Consumers Ohio Water Company, a subsidiary of the Company 
("Consumers Ohio").  Several areas in and around the plant were 
contaminated by the spill, although no mercury contaminated Consumers 
Ohio's water supply.  Consumers Ohio contacted all appropriate 
regulatory agencies regarding the spill, and the clean up was completed by 
the end of 1994.  The total cost to clean up the spill was approximately
$900,000.  Consumers Ohio received $100,000 from its insurer towards 
the clean-up costs and had sought recovery of all of the clean-up costs 
from the Contractor. 

   On December 20, 1993, the Contractor filed a Complaint against 
Consumers Ohio in Lake County Court of Common Pleas seeking recovery of 
the retainer of approximately $400,000 that Consumers Ohio had withheld 
on this project.  On December 30, 1993, Consumers Ohio filed a 
counterclaim against the Contractor seeking recovery of all past and 
future costs related to the spill.  Consumers Ohio settled the claims 
brought by the Contractor regarding the retainer, while continuing to 
pursue recovery of the costs of the spill.  On November 4, 1996, the 
Court granted the Contractor's motion for a directed verdict, finding that 
the Contractor was not liable for any of the clean-up costs.  Consumers Ohio 
has filed a notice of an appeal from this decision.  As a result of this
adverse judgment, Consumers Ohio increased the reserve previously taken to
cover clean-up costs by $560,000, or $360,000 net of taxes.

(b)  Schiavi Homes Litigation. In 1994, the Penobscot Indian Nation 
commenced litigation against the Company, a former subsidiary of the 
Company, a current subsidiary of the Company, and John H. Schiavi, a 
Director of the Company, among others, in the United States District Court 
for the District of Maine (the "District Court").   The Complaint filed in 
the District Court alleged, among other things, that one or all of 
the defendants defrauded the Penobscot Indian Nation by breaching their 
duty of good faith and fair dealing and by making misrepresentations in
connection with the acquisition of the assets of SHC Corporation, then a
subsidiary of the Company, by a Maine limited partnership in which the
Penobscot Indian Nation held a limited partnership interest. 

   On October 25, 1995, the District Court issued an order granting 
the summary judgment motions of certain defendants, including the Company, 
its current and former subsidiaries, and John H. Schiavi.  On or about June 
6, 1996, the Penobscot Indian Nation filed an appeal from the granting 
of summary judgment by the District Court with the United States First 
Circuit Court of Appeals alleging that the District Court erred in 
granting summary judgment to the Company and the other defendants.  
The parties have argued the appeal before the First Circuit Court of 
Appeals and are awaiting a decision. 

   In connection with this litigation, John L. Palmer (no relation 
to Director, John E. Palmer, Jr.), who was a co-defendant in the suit 
brought by the Penobscot Indian Nation and was formerly a director and 
officer of SHC Corporation, brought suit against the Company and its 
former subsidiary, SHC Corporation, in Cumberland County Superior Court in 
the State of Maine on May 29, 1996, seeking reimbursement of all of his 
legal  fees incurred in connection with his defense of the claims raised 
by the Penobscot Indian Nation in their original complaint.  The parties 
have completed discovery and are awaiting trial.

(c)  Candlewick Treatment Plant Litigation.  On August 25, 1995, the State 
of Illinois filed a Complaint in the Circuit Court of the 17th Judicial 
Court of Illinois in Boone County, Illinois against the Company and 
its subsidiary, Consumers Illinois Water Company ("Consumers 
Illinois"), alleging violation of the effluent discharge standards 
under various state and federal environmental regulations. The 
Complaint alleges that Consumers Illinois' wastewater treatment plant 
violated such effluent standards at various times since 1991 and seeks, 
among other things, a civil penalty of $10,000 per day for each day that the
alleged violation continued and a civil penalty of $50,000 for each 
alleged violation of the Illinois Environmental Protection Act and 
the Illinois Pollution Control Board's water pollution regulations.

   On or about September 20, 1995, the Candlewick Lake Association, Inc., 
an association of owners of lots within a lake community development known 
as Candlewick Lake and served by the Consumers Illinois wastewater 
treatment plant (the "Association"), sought to intervene in the case.  In 
its Complaint, the Association alleged that effluent from the 
Consumers Illinois plant had interfered with and damaged the recreational 
use of Candlewick Lake.  The Complaint sought $1,000,000 in damages 
from Consumers Illinois.  On October 25, 1996, Consumers Illinois entered 
into an agreement with the Association in which the Association agreed 
to dismiss its action against Consumers Illinois Water Company 
without prejudice to refile its suit.  Pursuant to the terms of the 
Settlement Agreement, Consumers Illinois agreed to cooperate in a study 
of water quality of Candlewick Lake and the possible change in the 
discharge point for Consumers Illinois' wastewater treatment plant.

   The Settlement Agreement with the Association does not affect the 
Complaint filed by the Illinois Attorney General, as to which the Company 
has filed a motion to dismiss on the basis of a lack of jurisdiction and as 
to which settlement negotiations between the Illinois Attorney 
General and Consumers Illinois are ongoing. 

(d)  Illinois Regulatory Appeal.  Consumers Illinois has filed in 
the Appellate Court for the Third District of Illinois a Notice of Appeal 
and Petition for Review of an Order of the Illinois Commerce 
Commission entered on May 8, 1996 (the "Order").  The Order requires 
the transfer of the net gain of approximately $394,000 resulting from the 
sale of land by Consumers Illinois from the shareholders of Consumers 
Illinois to ratepayers in Consumers Illinois' Kankakee district in the form 
of reduced rates over a 7-year period.  The Notice of Appeal, dated July 
17, 1996, was also directed to the City of Kankakee, the NutraSweet Group,
Governor's State University and the Village of University Park, who had
intervened in the underlying rate case giving rise to the Order.

Item 4.  Submission of Matters to a Vote of Security Holders.

                           None.

Item 5.  Market for the Registrant's Common Stock and Related Stockholder
Matters.

     (a)  Market Information

  The common shares of Consumers trade on the Nasdaq Stock Market (Nasdaq)
under the symbol: CONW.  The following table sets forth the high and low 
last sale prices for the common shares for the periods indicated, as 
reported by Nasdaq, together with cash dividends declared per common 
share.

                                                   DIVIDENDS
    Calendar Year         HIGH       LOW           DECLARED

    1996
    First Quarter         19        16 1/2           $0.30
    Second Quarter        18 1/4    14 1/2            0.30
    Third Quarter         18        15 1/2            0.30
    Fourth Quarter        19 1/4    16                0.30 
                                                     -----
                                                     $1.20 
    1995
    First Quarter         17 1/2    15 3/8           $0.295
    Second Quarter        16 7/8    14 3/4            0.295
    Third Quarter         17 1/4    15 1/2            0.30
    Fourth Quarter        19        16 1/2            0.30 
                                                     ------
                                                     $1.19 

     (b) Holders

As of December 31, 1996, there were approximately 6,255 shareholders of
record of the Registrant's common shares.

     (c) Recent Sales of Unregistered Securities

The Company did not make any unregistered sales of its securities
during the period covered by this report.

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

(Dollars in Thousands Except Per Share Amounts)
                         1996       1995       1994         1993         1992
Operating Revenue    $107,385   $101,773     $93,337   $  89,084     $ 84,245
Net Income from 
  Continuing 
  Operations         $  6,251   $ 11,303     $10,000   $  12,003     $  8,501
Earnings Per 
  Common Share:
  Continuing 
   Operations        $    .72   $   1.34     $  1.22    $   1.63     $   1.21
  Total              $    .72   $   1.34     $  1.22    $    .80     $   1.14
Dividends Declared 
 Per Common Share    $   1.20   $   1.19     $  1.17    $   1.15     $   1.13
Total Assets         $457,841   $432,084      $401,380  $371,657     $343,033
Long-Term Debt 
 of Continuing
  Operations 
 (including current 
  maturities, sinking 
  fund requirements 
  and redeemable
   preferred stock)  $173,562   $162,969      $132,648  $125,080     $131,667

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

  The following discussion and analysis sets forth certain factors 
relative to the Company's financial condition at December 31, 1996 and 
the results of its operations for the three years ended December 31, 
1996. 

LIQUIDITY AND CAPITAL RESOURCES

CONSTRUCTION PROGRAM

Capital construction expenditures in 1996 totaled $28.0 million, net 
of contributions and advances, substantially all of which relates to 
the Company's utility subsidiaries.  Projects include $3.7 million spent on 
a new water treatment plant expansion in Ohio, which cost $6.4 million 
in total; and many smaller projects throughout the Company. 

The Company expects capital expenditures for 1997 through 1999 to be 
$89 million, net of contributions and advances.  The capital 
construction budget is down from its peak of $103 million for the 
1995-1997 planning period as a result of the completion of many of 
the improvements required by the Safe Drinking Water Act (SDWA), the 
Clean Water Act (CWA), and other regulations. With the reduced capital
spending due to regulatory requirements, the Company has increased its
focus on replacing aging infrastructure.

The Company has also started planning a major plant upgrade at 
Consumers Pennsylvania Water Company - Shenango Valley Division.  This 
project is expected to cost approximately $31 million when it is completed 
in 2000.  This upgrade of one of the Company's older water treatment plants 
is required to keep it in compliance with current and future regulations 
and to meet expected increases in demand.  The project is still in 
the planning stage.  Several design and financing alternatives for this
project are still being explored.

Several of the Company's water utility subsidiaries have filed or plan to 
file rate cases in their respective jurisdictions for recovery of and 
return on capital used to fund their capital expenditure programs.  
Costs which have been prudently incurred in the judgement of the 
appropriate public utility commission have been, and are expected to 
continue to be, recognized in rate setting.  Given the large rate increases 
in recent years, Management expects the current increased scrutiny of rate
requests by state public utility commissions to continue even with 
decreasing capital construction budgets. 

FINANCING AND CAPITALIZATION

The table below shows the cash generated and used by the Company during 
1996.

Cash was generated from:
                                Dollars in millions
     Operations                         $21.3      
     Long-term debt issued               11.4      
     Common stock issued                  4.2      
     Proceeds from sale of properties      .8      
     Net borrowings of short-term debt    6.7      
                                       ------
     Total Cash Generated              $ 44.4      

Cash was used for:

     Capital expenditures, net of CIAC $(28.0)     
     Repayment of long-term debt        (  .7)     
     Payment of dividends               (10.4)     
     Increase in restricted funds       ( 2.1)     
     Cost of acquisition                ( 2.0)     
     Other                              ( 1.6)     
                                       -------
     Total Cash Used                 $  (44.8)     
                                       -------
     Decrease in Cash                $  (  .4)
                                       =======     

   Water utilities now require higher equity ratios than in the past 
to maintain favorable debt ratings due to the recognition by Standard & 
Poor's rating system of additional risk of the SDWA requirements and 
the uncertainty of future regulatory treatment of the cost of 
these requirements.  This, coupled with the size of the Company's 
capital expenditure program, makes it likely that the Company will return 
to the equity market again in the next few years.  The Company 
anticipates continuing to fund its immediate cash flow needs with short-term
lines of credit until a subsidiary's short-term debt level is high 
enough to warrant placement of long-term debt, generally, in the $4-$6 
million range.  The Company's subsidiaries had unused lines of 
credit available at December 31, 1996 of $72.6 million.  In addition 
the Company has two revolving credit agreements totaling $25 million.  
These agreements were renewed during the third quarter and are now 
committed until mid-1998.  The Company also anticipates receiving 
a committment for an additional $10 million revolving credit agreement 
in early 1997.  At December 31, 1996, $17.1 million was outstanding on these
agreements, which is recorded as long-term debt on the balance sheet.  
These borrowings were used primarily to provide equity infusions to 
the subsidiaries.  In addition, the Company is using funds 
generated  through its dividend reinvestment program.  The 
Dividend Reinvestment  Program generated $3.8 million in new equity in 
1996.  In addition  to short-term debt, the Company's water 
utility subsidiaries plan to continue to use tax-exempt, long-term debt 
financing in appropriate situations.  Retained earnings declined by 
$4.2 million in 1996 as a result of payments of dividends in excess of
earnings.  Given the seasonality of the business and the continuation 
of the current dividend, it is likely that retained earnings will decline
further at least through the first quarter of 1997.

ACQUISITIONS AND DISPOSITIONS

   Over the past five years, the Company has acquired nine water 
systems including three small systems in 1996.  Two of the systems are 
located in Maine and have 1,048 customers in the aggregate. The other 
is located in Pennsylvania and has 1,150 customers.  Management 
anticipates continuing the acquisition policy of recent years. 

   The Company has sold five divisions with customers totaling 
approximately 15,000 under the threat of eminent domain since 1991.  The 
gain on these sales totaled over $7 million.  The Town of Hudson, 
New Hampshire, has initiated eminent domain proceedings to acquire 
the distribution system assets of Consumers New Hampshire Water Company, 
which are located in Hudson.  The Town of Hudson must get approval from 
the New Hampshire Public Utilities Commission.  The ultimate resolution 
of these proceedings is unknown.  Approximately 4,500 of Consumers 
New Hampshire's 8,000 customers are located in Hudson.  The Company 
continues to work with the local communities in its service areas in an 
effort to prevent future eminent domain proceedings.

OTHER

   In March, 1993, an outside contractor spilled a small amount of 
mercury while working at Consumers Ohio's water treatment plant.  
Several areas in and around the plant were contaminated by the spill, 
although no mercury contaminated Consumers Ohio's water supply.  The 
cleanup has been completed at a total cost of approximately 
$900,000.  Consumers Ohio has received $100,000 from its insurer and 
had sought recovery of all the cleanup costs from the contractor.  
Management believed it possible that Consumers Ohio would recover cleanup
costs from  the contractor and/or the contractor's insurer and, therefore,
deferred  the costs incurred in connection with the spill.  However, due 
to the progress of the case and to the expected cost of the litigation, 
Consumers Ohio reserved $375,000 in 1995 for possible losses on this claim. 
In November, 1996, the contractor obtained a judgement in its favor, 
from which Consumers Ohio has appealed.  As a result of this 
adverse judgement, Consumers Ohio increased the reserve previously taken 
to cover the clean up and legal costs by $560,000 or $370,000, net of 
taxes. 

   In 1985, the Company's subsidiary, Consumers Maine Water Company 
(Consumers Maine), started construction of a trasmission main to Fish 
and Hobbs ponds, which are located in Hope, Maine, to increase the 
available water supply of its Camden and Rockland Division.  Due to 
local opposition related to the uncertainty about the environmental impact 
of withdrawing water from these ponds, the project was delayed.  In 
1989, final legislation was passed that imposed a moratorium on the 
withdrawal of water from these ponds.  The Maine Public Utilities Commission
(MPUC) ordered Consumers Maine to defer the costs of the project, the 
legal costs of defending the water rights and carrying costs until its 
first rate case after June 1, 1997.  Consumers Maine currently has $673,000 
on its balance sheet related to this project.  Consumers Maine expects to 
file a rate case with the MPUC in 1998 seeking recovery of these costs.

RESULTS OF OPERATIONS
1996 Compared to 1995

UTILITY REVENUE

Utilities revenues increased $4,444,000 or 5.0% in 1996 compared to 1995, 
due primarily to $5,256,000 in rate increases offset by reduced 
consumption.  The reduced consumption is due to a wet 1996 compared to a 
dry 1995 and reduced industrial usage.  The causes for the remainder of 
the reduced consumption are difficult to determine, but Management 
believes that some decreased usage may be attributable to 
increased conservation due to the large percentage rate increases.  
The Company has filed additional rate cases in jurisdictions with 
revenue shortfalls.  During 1996, the Company settled eight rate cases
providing additional annual revenues of $4.5 million.  Currently, the 
Company has four filings pending totaling $2.8 million of requested 
annualized revenue.

UTILITY OPERATING EXPENSES

   Water utility operating expenses increased approximately $4,465,000 
or 7.5%.  Expenses have increased due to increased depreciation of 
$1,267,000 and increased property taxes of $1,011,000 related to higher 
plant balances.  The remainder of the increase is due to increased 
operating expense of $400,000 at the new treatment plant at the 
Consumers Pennsylvania Water Company - Roaring Creek Division, which 
went on line in May, 1995, and normal expense increases.

OTHER OPERATIONS - REVENUE AND EXPENSE

   Other revenues, which consist primarily of revenues from Consumers 
Applied Technologies (CAT), increased $1,168,000 or 9.2% while other 
operating expenses increased $4,876,000 or 35.6%. CAT has been operating at 
a loss for the last nine quarters.  CAT's efforts to focus on higher 
margin technical and engineering work, while still pursuing opportunities 
in meter installation work were unsuccessful with its current 
organizational structure.  As a result, the Company decided to reorganize 
CAT and take certain other charges totaling $3,658,000 resulting in 
a $2,414,000 after tax charge.  CAT is closing its New Jersey and
Massachusetts offices and is consolidating some of those operations into 
its Orlando, Florida office.  In addition, CAT is phasing out its
environmental business and is refocusing its water meter installation
business. 

OTHER

   Interest expense increased $985,000 or 7.6%, due primarily to higher 
debt balances.

   Gains (losses) from sales of properties are down $1,348,000 compared 
to 1995.  In 1996, the Company's Illinois subsidiary reversed a 
gain previously taken on a land sale as a result of action taken by 
the Illinois Commerce Commission.  The Company's Illinois subsidiary 
has appealed this decision.  In addition to this gain reversal, the 
Company and its subsidiaries had small gains and losses on several other 
small sales of property in Ohio, Pennsylvania and New Hampshire.  In 1995, 
the Company recorded gains from the sale of the Damariscotta Division 
of Consumers Maine and the sale by Consumers Ohio of its Girard Lake 
Property. 

RESULTS OF OPERATIONS
1995 Compared to 1994

UTILITY REVENUE

  Utilities revenues were $8.8 million or 10.9%, greater in 1995 compared 
to 1994, due primarily to $6.3 million in rate increases, and 
increased consumption due to dry weather throughout the areas served by 
the Consumers Water Subsidiaries.  During 1995, the Company settled six 
rate cases providing additional annual revenues of $6.9 million. 

UTILITY OPERATING EXPENSES

  Water utility operating expenses were approximately $3.3 million, or 
5.9%, greater in 1995 compared to 1994.  Increased expenses associated 
with increased depreciation and property tax expense due to increased 
plant balances and depreciation rates accounted for most of the 
increase. 

OTHER OPERATIONS - REVENUE AND EXPENSE

  Other operating revenues were $331,000 or 2.6% lower in 1995 than in 
1994, while other operating expenses increased by $1.3 million or 
10.6% primarily due to reduced margins in meter installation work as 
CAT completed its meter installation contracts with the City of New York.  
CAT was unsuccessful in its bid for additional New York City 
meter installation projects in the first quarter of 1995 and attempted 
to shift its focus to higher margin technical and engineering work to 
help compensate for the lost contracts while still pursuing opportunities 
in meter installation work.  These efforts were unable to make up for the 
lost meter contracts, however, and CAT had a net loss of $790,000 in
1995.  An additional $2 million New York City meter installation contract
was awarded in late 1995. 

OTHER

  Interest expense increased $1,876,000 in 1995 compared to 1994, due
primarily to higher debt balances.

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

REPORT OF MANAGEMENT

Report of Independent Public Accountants                            

Consolidated Statements of Income for Years Ended
 December 31, 1996, 1995 and 1994                                   

Consolidated Balance Sheets at December 31, 1996 
 and 1995                                                                     

Consolidated Statements of Capitalization and
 Interim Financing at December 31, 1996 and 1995                    

Consolidated Statements of Cash Flow for Years Ended
 December 31, 1996, 1995 and 1994                                   

Consolidated Statements of Change in Common 
 Shareholders' Investment for Years Ended                        
 December 31, 1996, 1995 and 1994                                 

Notes to Consolidated Financial Statements

Quarterly Information Pertaining to the 
 Results of Operations for the Years Ended 
 December 31, 1996 and 1995                                                  

                    Consumers Water Company and Subsidiaries
                       Consolidated Statements of Income
                                   
                                   
For the years ended December 31,             
(In Thousands Except 
 Per Share Amounts)                1996           1995           1994
Revenue and Sales:
  Water utility operations       $93,587        $89,143        $80,376
  Other operations                13,798         12,630         12,961
                                 -------------------------------------
     Operating revenue           107,385        101,773         93,337 
                                 -------------------------------------
Costs and Expenses:
  Water utility operations        64,301         59,836         56,515
  Other operations                18,569         13,693         12,386
                                 -------------------------------------
     Operating expenses           82,870         73,529         68,901
                                 -------------------------------------
Operating Income                  24,515         28,244         24,436
                                 -------------------------------------
Other Income and (Expense):
  Interest expense               (14,717)       (13,938)       (12,497)
  Construction interest 
    capitalized                      780            986          1,421
  Preferred dividends and minority 
    interest of subsidiaries        (143)          (156)          (139)
  Other, net (Note 3)                 29            556          1,000 
                                 -------------------------------------
                                 (14,051)       (12,552)       (10,215)
                                 -------------------------------------
Earnings from Operations 
  Before Income Taxes and Gains
  (Losses) from Sales of 
    Properties                    10,464         15,692         14,221
Income Taxes (Note 2)              3,973          5,497          4,623
                                 -------------------------------------
Earnings from Operations
  Before Gains (Losses) from 
    Sales of Properties            6,491         10,195          9,598 
  Gains (Losses) from Sales of 
    Properties, Net (Note 7)        (240)         1,108            402 
                                 -------------------------------------
Net Income                        $6,251        $11,303        $10,000 
                                 =====================================
Weighted Average Shares 
  Outstanding                      8,628          8,388          8,161 
Earnings per Common 
  Share:
  Before Gains (Losses) from Sales
    of Properties                  $0.75          $1.21          $1.17 
  Total                            $0.72          $1.34          $1.22 
                                   
The accompanying notes are an integral part of these consolidated financial
statements.

                    Consumers Water Company and Subsidiaries
                          Consolidated Balance Sheets       
                              
                                                   December 31,   
(Dollars in Thousands)                         1996          1995
                                              --------------------
Assets                             
Property, Plant and Equipment, at cost:
  Water utility plant, in service           $474,703      $436,248
  Less - Accumulated depreciation             83,045        74,414
                                           -------------------------
                                             391,658       361,834
                                           -------------------------
  Other subsidiaries                           2,558         2,197
  Less - Accumulated depreciation              1,596         1,307 
                                           -------------------------
                                                 962           890
                                           -------------------------
 Construction work in progress                12,567        18,067
                                           -------------------------
   Net property, plant and equipment         405,187       380,791
                                           -------------------------
Investments, at cost                           1,706         1,762
                                           -------------------------
Current Assets:                              
   Cash and cash equivalents (Note 1)          2,214         2,576
   Accounts receivable, net of reserves 
     of $1,114 in 1996 and $848 in 1995       12,445        12,719
  Unbilled revenue                             7,015         7,014
  Inventories (Note 1)                         2,456         2,833
  Prepayments and other                        7,219         6,143
                                           -------------------------
    Total current assets                      31,349        31,285
                                           -------------------------
Other Assets:                                          
  Funds restricted for construction 
    activity (Note 3)                          2,380           287
  Deferred charges and other assets           17,219        17,959
                                           ------------------------- 
                                              19,599        18,246
                                           -------------------------
                                            $457,841      $432,084     
                                           =========================
Shareholders' Investment and Liabilities:
Capitalization (See Separate Statement)                          
  Common shareholders' investment           $106,015      $105,999
  Preferred shareholders' investment           1,054         1,069
    Minority interest                          2,352         2,355
    Long-term debt                           172,917       162,161 
                                           -------------------------
      Total capitalization                   282,338       271,584 
                                           -------------------------
Contributions in Aid of Construction          73,208        67,439
                                           -------------------------
Current Liabilities:
   Interim financing 
     (See Separate Statement)                 19,199        12,537 
   Accounts payable                            6,425         6,060 
   Accrued taxes (Note 2)                      6,071         7,611
   Accrued interest                            3,873         3,609
   Accrued expenses and other                 15,161        13,632     
                                           --------------------------
     Total current liabilities                50,729         43,449
                                           --------------------------
Commitments and Contingencies (Note 10)                          
Deferred Credits:                                      
  Customers' advances for construction        22,378         22,507
  Deferred income taxes (Note 2)              24,506         22,260
  Unamortized investment tax credits           4,682          4,845
                                           --------------------------
                                              51,566         49,612 
                                           --------------------------
                                            $457,841       $432,084
                                           ==========================

The accompanying notes are an integral part of these consolidated financial
statements.

                    Consumers Water Company and Subsidiaries          
           Consolidated Statements of Capitalization and Interim Financing
                              
                                                 December 31,   
(Dollars in Thousands)                         1996         1995
                                              -------------------
Capitalization (Notes 3 and 5)
Common shareholders' investment:
  Common stock, $1 par value
  Authorized: 15,000,000 shares
    Issued: 8,732,202 shares in 
     1996 and 8,494,686 shares in 1995       $8,732       $8,495
  Amounts in excess of par value             75,686       71,718
  Reinvested earnings                        21,597       25,786
                                           ------------------------ 
                                            106,015      105,999 
                                           ------------------------
Preferred shareholders' investment:
  Preferred stock, $100 par value             1,054        1,069
                                           ------------------------
Minority interest:
  Common stock, at equity                       674          677
  Preferred stock                             1,678        1,678
                                           ------------------------
                                              2,352        2,355
                                           ------------------------
Long-term debt:
  First mortgage bonds, debentures 
    and promissory notes-
     Maturities          Interest Rate Range           
     1996           6.10% to 11.00%             -             58
     1997           5.94% to 6.10%                7       16,019
     1998           5.70% to 6.07%           17,069            7
     1999           7.00% to 8.50%               45           63
     2000           8.59%                        11           15
     2001           ---                         -            - 
     2002-2006      8.00% to 9.50%           13,440       13,905 
     2007-2011      1.00% to 10.55%           6,959        7,018 
     2012-2016      0.00% to 9.50%            9,139        9,000 
     THEREAFTER     5.60% to 10.40%         126,892      116,783 
                                           ------------------------
   Total first mortgage bonds, debentures 
     and notes                              173,562      162,868
   Less - Sinking fund requirements and 
     current maturities                         645          707
                                           ------------------------
                                            172,917      162,161 
                                           ------------------------
    Total capitalization                    282,338      271,584
                                           ------------------------
Interim financing (Note 4):                            
   Notes payable                             18,554       11,830 
   Sinking fund requirements and 
     current maturities                         645          707 
                                           ------------------------
   Total interim financing                   19,199       12,537 
                                           ------------------------
Total capitalization and interim financing $301,537     $284,121 
                                           ========================

The accompanying notes are an integral part of these consolidated financial
statements.    

                  Consumers Water Company and Subsidiaries          
                    Consolidated Statements of Cash Flows


                                            For the years ended December 31,
(Dollars in Thousands)                        1996        1995       1994
                                            --------------------------------
Operating activities:                                            
  Net income                                $6,251     $11,303    $10,000 
Adjustments to reconcile net income to 
  net cash provided by
  operating activities:                                          
    Depreciation and amortization           12,093       10,481     8,993 
    Deferred income taxes and 
      investment tax credits                 2,720        1,768     1,777 
    (Gains) losses on sales of properties      240       (1,108)     (402)
    Changes in assets and liabilities:                                 
      (Increase) decrease in accounts 
        receivable and unbilled revenue        393         (338)   (2,471)
     (Increase) decrease in inventories        386         (575)     (465)
     (Increase) decrease in prepaid 
       expenses                             (1,075)         (27)      408 
     Increase in accounts payable and 
        accrued expenses                       340        2,453     1,013 
Change in other assets, net of change 
  in other liabilities of continuing
  operations                                (2,811)      (2,516)   (1,883)
Change in assets, net of change in 
  liabilities of discontinued operations      -             -       1,308 
                                          -----------------------------------
  Total adjustments                         12,286       10,138     8,278 
                                          -----------------------------------
  Net cash provided by operating 
    activities                              18,537       21,441    18,278
                                          -----------------------------------
Investing activities:
  Capital expenditures                     (35,163)     (40,516)  (39,345)
  Payment received on a note receivable      1,330         -          -
  (Increase) decrease in funds 
     restricted for construction activity   (2,093)       2,216     7,005 
  Increase in construction accounts 
    payable                                    205          126        28 
  Net cash cost of acquisitions (Note 6)    (1,990)      (1,300)   (1,426)
  Net proceeds from sales of properties 
    (Note 7)                                   847        4,235       659 
                                          -----------------------------------
  Net cash used in investing activities    (36,864)     (35,239)  (33,079)
                                          -----------------------------------
Financing activities:                                            
  Net borrowing (repayment) of 
    short-term debt                          6,724      (15,476)    7,630 
  Proceeds from issuance of 
    long-term debt                          11,410       48,349     9,053 
  Repayment of long-term debt                 (714)     (18,029)   (1,485)
  Proceeds from issuance of stock            4,182        3,876     3,640 
  Advances and contributions in aid 
    of construction, net of repayments       7,143        5,223     4,147 
  Taxes paid by developers on advances 
    and contributions in aid of 
    construction                              (383)        (513)     (726)
  Cash dividends paid                      (10,397)      (9,962)   (9,545)
                                          -----------------------------------  
    Net cash provided by financing 
      activities                            17,965       13,468    12,714 
                                         -----------------------------------
  Net decrease in cash and 
    cash equivalents                          (362)        (330)   (2,087)
Cash and cash equivalents at beginning 
  of year                                    2,576        2,906     4,993 
                                         -----------------------------------
  Cash and cash equivalents at 
    end of year                             $2,214       $2,576    $2,906 
                                         ===================================

Supplemental disclosures of cash flow 
information from continuing operations                                         

  Cash paid during the year for:                                 
    Interest (net of amounts 
      capitalized)                         $13,388      $12,532   $10,712 
    Income taxes                            $4,541       $2,879    $4,123 
Noncash investing and financing 
activities for the year:                                    
  Assets acquired by stock issuance 
    and/or assumption of debt of 
    acquired company                           -           $150       -
  Property advanced or contributed          $1,543       $1,230    $2,713 

                                                  
The accompanying notes are an integral part of these consolidated financial
statements.

               Consumers Water Company and Subsidiaries
                 Consolidated Statements of Change in
                    Common Shareholders' Investment              

         For the years ended December 31, 1996, 1995 and 1994                  

                              Number of Shares,
                              $1 par value,      (Dollars in Thousands)
                              Issued and          Excess of      Reinvested
                              Outstanding         Par Value      Earnings
                              -----------------------------------------------
Balance, December 31, 1993    8,041,369           $64,662        $24,235 
  Net income                                                      10,000
  Cash dividends:
    Common shares                                                 (9,594)
    Preferred shares                                                 (56)
  Dividend Reinvestment Plan    193,908             3,049             
  Employee benefit plans         24,408               389 
  Other                             -                 (16)            (1)
                               -----------------------------------------------
Balance, December 31, 1994    8,259,685            68,084         24,584 
  Net income                                                      11,303 
  Cash dividends:                                      
    Common shares                                                (10,044)
    Preferred shares                                                 (56)
  Dividend Reinvestment Plan    212,149             3,280   
  Employee benefit plans         22,852               371   
  Other                             -                 (17)            (1)
                               -----------------------------------------------
Balance, December 31, 1995    8,494,686            71,718         25,786 
  Net income                                                       6,251 
  Cash dividends:                                      
    Common shares                                                (10,386)
    Preferred shares                                                 (55)
  Dividend Reinvestment Plan    215,128             3,571   
  Employee benefit plans         22,388               384   
  Other                             -                  13              1 
                               -----------------------------------------------
Balance, December 31, 1996    8,732,202           $75,686        $21,597 
                               ===============================================

The accompanying notes are an integral part of these consolidated financial
statements.

           Consumers Water Company and Subsidiaries
                        REPORT OF MANAGEMENT


The accompanying consolidated financial statements of Consumers Water 
Company and its subsidiaries were prepared by management, which is 
responsible for the integrity and objectivity of the data presented, 
including amounts that must necessarily be based on judgments or 
estimates.  The consolidated financial statements were prepared in 
conformity with generally accepted accounting principles and 
financial information appearing throughout this annual report is consistent
with these statements.

In recognition of its responsibility, management maintains and relies 
upon systems of internal accounting controls, which are reviewed and 
evaluated on an ongoing basis.  The systems are designed to provide 
reasonable assurance that transactions are executed in accordance 
with management's authorization and properly recorded to permit preparation 
of reliable financial statements, and that assets are safeguarded.  
Management must assess and balance the relative cost and expected benefits 
of these controls.

These financial statements have been audited by Arthur Andersen LLP, 
the Company's independent public accountants.  Their audit, in accordance 
with generally accepted auditing standards, resulted in the expression 
of their opinion.  Arthur Andersen LLP's audit does not limit 
management's responsibility for the fair presentation of the 
financial statements and all other information in this annual report.

The Audit Committee of the Board of Directors, composed solely of 
outside directors, meets periodically with management, internal 
audit personnel, and Arthur Andersen LLP to review the work of each and 
to discuss areas relating to internal accounting controls, audits, 
and financial reporting.  Arthur Andersen LLP and the Company's 
internal auditor have free access to meet individually with the 
Committee, without management present, at any time, and they periodically 
do so.

\s\ John F. Isacke   
------------------
John F. Isacke
Senior Vice President
Chief Financial Officer

              REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Shareholders and Board of Directors
of Consumers Water Company:

We have audited the accompanying consolidated balance sheets and 
the consolidated statements of capitalization and interim financing 
of CONSUMERS WATER COMPANY (a Maine corporation) and subsidiaries as 
of December 31, 1996 and 1995, and the related consolidated statements 
of income, change in common shareholders' investment and cash flows for 
each of the three years in the period ended December 31, 1996.  
These consolidated financial statements and the schedule referred to below 
are the responsibility of the Company's management.  Our responsibility 
is to express an opinion on these financial statements and schedule 
based on our audits.

We conducted our audits in accordance with generally accepted 
auditing standards.  Those standards require that we plan and perform 
the audit to obtain reasonable assurance about whether the 
financial statements are free of material misstatement.  An audit 
includes examining, on a test basis, evidence supporting the amounts 
and disclosures in the financial statements.  An audit also includes 
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial 
statement presentation.  We believe that our audits provide a reasonable 
basis for our opinion.

In our opinion, the financial statements referred to above present fairly, 
in all material respects, the financial position of Consumers Water 
Company and subsidiaries as of December 31, 1996 and 1995, and the results 
of their operations and their cash flows for each of the three years in 
the period ended December 31, 1996, in conformity with generally 
accepted accounting principles. 

Our audit was made for the purpose of forming an opinion on the 
basic financial statements taken as a whole.  Schedule II, Valuation and
Qualifying Accounts for the years ended December 31, 1996, 1995, 
and 1994, is presented for purposes of complying with the Securities and
Exchange Commission's rules and is not a required part of the basic 
financial statements.  This schedule has been subjected to the auditing
procedures applied in our audit of the basic financial statements and, 
in our opinion, is fairly stated in relation to the basic financial 
statements taken as a whole.

                                               \s\ Arthur Andersen LLP
                                               ------------------------
                                                   ARTHUR ANDERSEN LLP

Boston, Massachusetts
February 5, 1997

(1) Summary of Significant Accounting Policies

Business
   Consumers Water Company (Consumers or the Company) is a holding 
and management company whose principal business is the ownership and 
operation of water utility subsidiaries.  Consumers owns directly 
or indirectly at least 90% of the voting stock of 8 water companies 
(the Consumers Water Subsidiaries) which operate 28 divisions providing 
water service to approximately 228,000 customers in six states.  The 
Company also owns 100% of Consumers Applied Technologies, Inc. (CAT), which 
in 1996 provided services primarily in the areas of meter installation,
corrosion engineering, contract operations and water conservation.  

Principles of Consolidation
   The accompanying consolidated financial statements include the accounts 
of Consumers and its water utility and utility services subsidiaries.  
All significant intercompany balances and transactions have been eliminated 
in consolidation.  

Regulation
   The rates, operations, accounting and certain other practices of the
Company's utility subsidiaries are subject to the regulatory authority of
State Public Utility Commissions.

Property, Plant and Equipment
   The utility subsidiaries generally capitalize interest at current rates 
on short-term notes payable used to finance major construction 
projects.  Utility plant construction costs also include payroll, 
related fringe benefits and other overhead costs associated with 
construction activity.  Depreciation is provided principally at 
straight-line composite rates.  The consolidated provision, based on 
average amounts of depreciable utility plant (which excludes contributions 
in aid of construction and customers' advances for construction for most
subsidiaries), approximated 2.8% in 1996, 2.7% in 1995 and 2.5% in 1994. 
Under composite depreciation, when property is retired or sold in the 
normal course of business, the entire cost, including net cost of removal, 
is charged to accumulated depreciation, and no gain or loss is recognized.

   CAT depreciates property and equipment using the straight-line method 
over the estimated useful lives of the assets, generally five to ten years.  

Use of Estimates in the Preparation of Financial Statements
   The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the 
financial statements and the reported amounts of revenues and expenses 
during the reporting period.  Actual results could differ from those
estimates.

Revenue Recognition
   All of the utility subsidiaries accrue estimated revenue for 
water distributed but not yet billed as of the balance sheet date.  
Unbilled revenue also includes amounts for work performed but not yet 
billed for Consumers Applied Technologies, Inc.  CAT accounts for 
contracts using the percentage-of-completion method for long-term 
contracts and the completed contract method for short-term contracts.  

Cash Flows   
   For purposes of the consolidated statements of cash flows, the 
Company considers all highly liquid instruments with an original 
maturity of three months or less, which are not restricted for 
construction activity to be cash equivalents.

Disclosures about Fair Value of Financial Instruments
   The carrying amount of cash, temporary investments, notes receivable 
and preferred stock approximate their fair value.  The fair value of 
long-term debt based on borrowing rates currently available for loans 
with similar terms and maturities is approximately $179 million.


Inventories
   Inventories generally consist of materials and supplies.  They are 
stated at the lower of cost (average cost method) or market.

Other Assets
   Deferred charges consist primarily of financing charges, rate case, 
other expenses, and notes receivable totaling $245,248.
    Deferred rate case expenses are amortized over periods allowed 
by the governing regulatory authorities, generally one to three years.  
Other assets also include preliminary survey and investigation costs and
certain items amortized, subject to regulatory approval, over their
anticipated period of recovery.  Deferred financing charges are amortized 
over the lives of the related debt issues.

Customers' Advances/Contributions in Aid of Construction
   The water subsidiaries receive contributions and advances for 
construction from or on behalf of customers.  Advances received are
refundable, under certain circumstances, either wholly or in part, over
varying periods of time.  Amounts no longer refundable are reclassified 
to contributions in aid of construction.
   Contributions and advances received after 1986, but before June 12, 
1996, are treated as taxable income.  Amounts that customers are required 
to contribute to offset the income taxes payable by the Company are 
normally included in contributions or advances.

Income Taxes
   The Company and its subsidiaries file a consolidated federal income 
tax return.  The rate-making practices followed by most regulatory 
agencies allow the utility subsidiaries to recover, through customer 
rates, federal and state income taxes payable currently and deferred 
taxes related to certain temporary differences between pretax 
accounting income and taxable income.  The income tax effects of 
other temporary differences are flowed through for rate-making and 
accounting purposes.  The Company expects that deferred taxes not 
collected will be recovered through customer rates in the future when 
such taxes become payable.

Investment Tax Credits
   Investment tax credits of utility subsidiaries are deferred and 
amortized over the estimated useful lives of the related properties. 
Effective January 1, 1986, investment tax credits were eliminated by the 
Tax Reform Act of 1986 except for property meeting the transitional rules.  

Earnings (Loss) Per Common Share
   Earnings (loss) per common share are based on the annual weighted 
average number of shares outstanding and common share equivalents.  The 
effect of employee stock options, which are included as common share
equivalents, is not significant.

New Accounting Pronouncements: SFAS No. 121
   SFAS No. 121, Accounting for the Impairment of Long-Lived Assets to 
be Disposed of, requires impairment losses on long-lived assets to 
be recognized when an asset's book value exceeds its expected future 
cash flows (undiscounted).  This statement imposes stricter criteria 
for regulatory assets by requiring that such assets be probable of 
future recovery at each balance sheet date.  The Company adopted this 
standard in 1996.  The adoption of SFAS No. 121 did not have a material 
impact on the financial position or results of operations of the Company.

(2)  Income Tax Expense

The Company uses the liability method in accounting for income taxes.  
Under the liability method, deferred income taxes are recognized at 
currently enacted income tax rates to reflect the tax effect of 
temporary differences between the financial reporting and tax bases of 
assets and liabilities.  Such temporary differences are the result 
of provisions in the income tax law that either require or permit 
certain items to be reported on the income tax return in a different 
period than they are reported in the financial statements.  To the extent 
such income taxes are recoverable or payable through future rates, 
regulatory assets and liabilities have been recorded in the accompanying
Consolidated Balance Sheets. Net regulatory assets of approximately $3.9
million and $3.7 million at December 31, 1996 and 1995 respectively are
reflected in the balance sheet.  

   Accumulated deferred taxes consisted of tax assets of $565,000, 
$599,000, and $985,000 related to alternative minimum tax offset 
by liabilities of $23,655,000, $22,347,000, and $21,054,000, which 
are predominantly related to depreciation and other plant related 
differences in 1996, 1995 and 1994, respectively.  The Company has 
reserved $613,000 for state net operating loss carryforwards at CAT.  
All other deferred tax assets are expected to be realized in the 
future; therefore, no additional valuation allowance has been recorded.

     The components of income tax expense from continuing operations 
reflected in the Consolidated Statements of Income are as follows:

                                   For the Years Ended December 31,
(Dollars in Thousands)         1996             1995             1994 
----------------------------------------------------------------------
Federal:           
  Currently payable          $2,353           $4,646           $4,209
  Deferred                    1,025            1,413              561
  Investment tax credit, 
    net of amortization        (185)            (190)             (139)       
                             ------------------------------------------
                             $3,193           $5,869            $4,631
State:                       ------------------------------------------
  Currently payable             308              214               506
  Deferred                      317              265             (  13)
 State investment tax credit,
   net of amortization            4               29               -    
                             ------------------------------------------
                                629              508               493
                             ------------------------------------------ 
  Total provision            $3,822           $6,377            $5,124
                             ==========================================
The provision for income tax 
   expense is reflected in:
  Income taxes               $3,973           $5,497            $4,623
  Gains (Losses) from sales of 
     properties                 (94)             920               242
  Other income                  (57)             (40)              259
                             ------------------------------------------
  Total provision            $3,822           $6,377            $5,124
                             ==========================================
     The table below reconciles the federal statutory rate to a rate 
computed by dividing income tax expense, as shown in the previous table, 
by income from continuing operations before income tax expense.

                               1996            1995              1994
                               ---------------------------------------
Statutory rate                 34.0%            34.0%            34.0%
State taxes, net of 
  federal benefit               4.1              1.9              2.2   
Effect of decrease in 
  statutory rate on reversing 
  timing items                  (.6)            ( .2)            ( .2)  

Investment tax credit          (1.8)            (1.0)            (1.0)  
Other                           2.2              1.4             (1.1)  
                               ----------------------------------------
                               37.9%            36.1%            33.9%
                               ========================================
(3) Long-Term Debt

Maturities and sinking fund requirements of the first mortgage 
bonds, debentures and notes, including capitalized leases, are $645,000 
in 1997, $836,000 in 1998, $17,891,000 in 1999, $2,010,000 in 2000, 
$2,010,000 in 2001 and $150,170,000 thereafter.    Substantially all of 
the Company's water utility plant is pledged as security under various
indentures or mortgages.  The indentures restrict cash dividends and
repurchases of the Companys' common stocks.  The various water utility
subsidiaries' indentures generally prohibit the payment of dividends on 
common shares in excess of retained earnings plus a stated dollar amount. 
Approximately $34.5 million of reinvested earnings were not so restricted 
at December 31, 1996.

   In 1996, funds restricted for construction activity of $10 million 
was obtained through the issuance of tax exempt bonds, the use of which 
is restricted for utility plant construction.  At December 31,1996, there 
was $2.4 million of restricted funds remaining.  Interest income earned 
is included in Other, net in the accompanying Consolidated Statements of
Income.     

(4)  Notes Payable

Notes payable are incurred primarily for temporary financing of plant
expansion. 
It is the subsidiaries' intent to repay these borrowings with the proceeds
from
the issuance of long-term debt or equity securities.  Certain information
related to the borrowings of the continuing operations is as follows:

(Dollars in Thousands)             1996           1995            1994
                                ---------------------------------------- 
Unused lines of bank 
  credit                         $72,646        $43,670         $56,694
Borrowings outstanding at 
  year-end                        18,554         11,830          27,306
Total lines of bank             ----------------------------------------
  credit                         $91,200        $55,500         $84,000
Monthly average borrowings      ========================================
  during the year                $18,271        $24,795         $27,679
Maximum borrowings at any       ========================================
  month-end during the year      $21,815        $34,915         $34,600
Weighted average annual interest========================================
  rate during the year              7.0%           7.5%            6.6% 
Weighted average interest rate  ========================================
  on borrowings outstanding     
  at year-end                       6.7%           7.3%            7.0%
                                ========================================
(5) Shareholders' Investment

As of December 31, 1996, the Company reserved issuable common shares for 
the following purposes:

               Dividend Reinvestment Plan         196,543
               401(k) Savings Plan                177,317
               Stock Option Plans                 120,000
               Long-term Incentive Plan           400,000
                                                 ---------
                                                  893,860

   The stock option plans approved by stockholders in 1988 and 1993 
provide for the sale of shares to eligible key employees of the Company 
and its subsidiaries.  The plans provide that option prices shall not be 
less than 100% of the fair market value on the date of the grant.  The 
options expire after five years.  During 1996, 30,000 options were 
granted, 1,300 options were exercised, and 19,654 options lapsed and 
were canceled.  During 1995, 27,000 options were granted, no options were
exercised and 38,493 options lapsed and were canceled.  During 1994, 
29,000 options were granted, 1,980 options were exercised, and 34,833 
options lapsed and were canceled.  At December 31, 1996, options for 
120,000 shares were exercisable at prices of $17.75, $18.50, $18.25,
$17.25, and $16.75 per share.  Stock options were exercised in 1996 at 
$16.50. No options were exercised in 1995.  Stock options were exercised 
in 1994 at $18.25 and $16.50 per share. 

   Information regarding outstanding preferred stock ($100 par value) of 
the Company and its subsidiaries is as follows:

<TABLE>
                                                                               
      Par Value
                                                                               
       of Shares       
                            Cumulative   Current                      Shares   
       Outstanding
                            Dividend     Call Price      Shares       Issued
and       (Dollars in
                            Rate %       Per Share       Authorized  
Outstanding      Thousands)
-----------------------------------------------------------------------------------------
<S>                         <C>          <C>            <C>          <C>       
       <C>
Consumers Pennsylvania--
  Shenango Valley Division  5            $110            10,000       9,964    
        $996
Consumers Illinois Water 
  Company                   5 1/2         107             5,000       3,577    
         358
Consumers Maine Water 
  Company                   5             105             4,000       2,739    
         274
Consumers Water Company     5 1/4         105            30,000      10,538    
       1,054
Consumers Water Company       -          None           120,000         -      
          -  

</TABLE>

   In addition to the shares listed above, Consumers Water Company owns 36
preferred shares of Consumers Pennsylvania Water Company-Shenango Valley
Division, 423 preferred shares of Consumers Illinois Water Company and 11
preferred shares of Consumers Maine Water Company.

   Of the total 30,000 Consumers Water Company preferred shares 
authorized with voting rights, 15,925 shares have been designated 
5-1/4% Cumulative Preferred Stock Series A.  The remaining 14,075 shares 
are undesignated.  The difference between par value and acquisition price 
was credited to amounts in excess of par value.  The Company adopted the
disclosure-only option under SFAS No. 123, Accounting for Stock-Based
Compensation, as of December 31, 1996.  If the accounting provisions of 
the new Statement had been adopted as of the beginning of 1996, the effect 
on 1996 net earnings would have been immaterial.  Further, based on
current and anticipated use of stock options, it is not envisioned that 
the impact of the Statement's accounting provisions would be material in 
any future period.

(6) Acquisitions

  On November 18, 1996, the Company, through its subsidiary, Consumers 
Maine Water Company, acquired the stock of the Bucksport Water Company 
for $1,079,000.  Bucksport Water Company was subsequently merged into
Consumers Maine Water Company.

 On September 10, 1996, the Company, through its subsidiary, Consumers 
Maine Water Company, acquired the assets of Hartland Water Company for
$148,000.

  On September 23, 1996, the Company, through its subsidiary, Consumers
Pennsylvania Water Company-Shenango Valley Division, acquired the assets 
of Mercer Water Company for $761,000.

  On September 14, 1995, the Company, through its subsidiary, Consumers New
Jersey Water Company, acquired the water utility assets of Lakeland County
Hospital for $1,450,000.

   On September 2, 1994, the Company, through its subsidiary Consumers
Pennsylvania Water Company-Roaring Creek Division, acquired the assets of
Ralpho Township water system for $1,426,000.

   All of these acquisitions were accounted for using the purchase method of
accounting, and the results of their operations have been included in the
consolidated financial statements since the date of acquisition.

(7) Dispositions

   In 1994, Consumers Illinois recorded a gain, net of taxes of $394,000 
from the sale of nine acres of land.  In 1996, as part of a rate hearing, 
the Illinois Commerce Commission ordered Consumers Illinois to return the 
gain from this sale to the customer through reduced rates.  Therefore, 
the gain was reversed in the second quarter of 1996.  On July 17, 1996,
Consumers Illinois filed in the Appellate Court for the Third District of
Illinois a Notice of Appeal and Petition for Review of the Commission's 
Order. 

   On June 5, 1995, the Company's Consumers Ohio Water Company subsidiary
closed on the sale of Girard Lake and Liberty Lake.  These two lakes once
supplied raw water to the area's steel industry.  The lakes have not been
needed as a source of supply for several years.  The lakes were sold for 
$2.5 million and generated a gain, net of taxes, of $724,000.

   On December 29, 1994, Consumers Illinois Water Company closed on the 
sale of 9 acres of land in Bradley,  Illinois for $667,000.  This sale
generated a gain, net of taxes, of $394,000.

   On October 20, 1994, the Damariscotta division of Consumers Maine 
Water Company was taken by the local communities by eminent domain 
for $600,000 or approximately 75% of rate base.  Consumers Maine prepared 
to challenge the purchase price in court, but, instead, on February 21, 
1995, reached an out of court settlement for $1,552,000.  This sale 
generated a gain which was recorded in 1995 of approximately $363,000, net 
of taxes.
   
(8) Retirement Plan

   The Company has a defined benefit pension plan covering substantially 
all of its employees.  Pension benefits are based on years of service and 
the employee's average salary during the last five years of employment.  
The Company's funding policy is to contribute an amount that will provide 
for benefits attributed to service to date and for those expected to be 
earned in the future by current participants, to the extent deductible for
income tax purposes. 

The funded status of the plan as of December 31 is as follows:

(Dollars in Thousands)                        1996             1995            
---------------------------------------------------------------------  
Actuarial present value of benefit 
  obligations:
  Accumulated benefit obligations
     Vested                                  $24,167          $22,441          
     Nonvested                                 1,651            1,583          
                                             ------------------------
Total                                         25,818           24,024          
  Effect of future salary increases            6,594            7,045          
Projected benefit obligations for services   ------------------------
  provided to date                            32,412           31,069          
Market value of plan assets, primarily                       
  invested in stocks, bonds and short-term 
  funds                                       38,112           32,849          
Plan assets in excess of projected           ------------------------
  benefit obligations                          5,700            1,780          
Unrecognized net asset existing
  as of January 1, 1987, being amortized over 
  22 years                                   (2,690)           (2,899)
Unrecognized prior service cost               1,959             2,171
Unrecognized net gain                        (7,258)           (3,718)
                                            --------------------------
Accrued pension cost at year-end            $(2,289)          $(2,666)
                                            ==========================
Net pension cost included the following items:

(Dollars in Thousands)                  1996           1995           1994
---------------------------------------------------------------------------
Service cost-benefits earned 
  during the year                     $1,142         $  980          $1,151
Interest cost on projected 
  benefit obligations                  2,430          2,236           2,178
Actual loss (return) on plan assets   (5,869)        (6,555)          1,656
Net amortization and deferral          2,946          4,127          (4,322)
                                      --------------------------------------
Net periodic pension cost              $ 649        $   788         $   663
                                      ======================================

   The expected long-term rate of return on plan assets was 9.0% in 1996, 
1995 and in 1994. The salary increase assumption was 4.5% in 1996, 5.0% 
in 1995 and in 1994. The discount rate used to determine the actuarial 
present value of the projected benefit obligations was 8.0% in 1996, 8.0% 
in 1995, and 8.5% in 1994.    The Company also has a 401(k) Plan, which 
covers substantially all its employees.  The Company matches up to 40% of 
an employee's contributions in Company stock, subject to a $1,040 
limitation.  The value of the match was $394,000, $364,000 and $371,000 
in 1996, 1995, and 1994, respectively. 

(9)  Postretirement Benefits

   Employees retiring from the Company in accordance with the retirement 
plan provisions are entitled to postretirement health care and life 
insurance coverage. These benefits are subject to deductibles, 
co-payment provisions and other limitations.  The Company may amend or 
change the plan periodically.  

   The Company has adopted the delayed recognition method under which 
the unrecorded SFAS 106 liability as of January 1, 1993, will be amortized 
to expense on a straight-line basis over a 20-year period.  

   The following table sets forth the postretirement health and life 
insurance plans' combined funded status.

(Dollars in Thousands)                            1996           1995
------------------------------------------------------------------------
Accumulated postretirement benefit                                  
  obligation                                   ($3,226)         ($3,447)
Plan assets at fair value                          -               -    
Accumulated postretirement benefit            --------------------------
  obligation in excess of plan assets          ($3,226)         ($3,447)
Unrecognized net gain from past
  experience different from that assumed
  and from changes in assumptions               (1,337)            (835)
Unrecognized transition obligation               2,567            2,727
                                               -------------------------
Accrued postretirement benefit cost            ($1,996)         ($1,555)
                                               =========================
   The Company's postretirement health and life insurance plans are 
unfunded; there are no assets for either plan and the accumulated
postretirement benefit obligation for health insurance is $2,407,000 
and for life insurance is $819,000.

Net periodic postretirement benefit cost included the following components;

(Dollars in Thousands)                       1996         1995          1994
----------------------------------------------------------------------------
Service cost-benefits attributed to
  service during the period                  $132         $148          $182
Interest cost on accumulated 
  postretirement benefit obligation           272          292           286
Amortization of transition obligation
  over 20 years                               160          160           160
Net amortization and deferral                ( 30)        (  6)           - 
                                             -------------------------------
Net periodic postretirement benefit cost     $534         $594          $628
                                             ===============================
   The weighted average discount rate used in determining the 
accumulated postretirement benefit obligation was 8.0% in 1996 and in 1995 
and 8.5% in 1994.  An 8% annual rate of increase in the per capita cost 
of covered health care benefits is assumed for 1996, an 8% increase for 
1995 and a 10% increase for 1994. The health care cost trend rate is 
assumed to decrease annually through the year 2001 to an ultimate rate of 
5%. 
   Increasing the assumed health care cost trend rates by 1% would 
increase the accumulated postretirement benefit obligation by $77,000 as 
of September 30, 1996, $123,000 as of September 30, 1995, and $112,000 as 
of September 30, 1994.  The effect of this increase in trend rate 
assumptions on the sum of the service cost and interest cost components of 
the net periodic postretirement benefit cost for the year ended December 31,
1996, would be an increase of $14,000.

(10) Commitments and Contingencies

   The Company is a party in or may be affected by various matters 
under litigation.   Many of the improvements required by the Safe 
Drinking Water Act have been completed.  The Company expects that some of 
its subsidiaries will need to make significant additional 
improvements, however, including, but not limited to, construction 
of treatment plants, new wells and replacement of water mains, to stay 
in compliance with environmental regulations and to replace aging 
plant.  Management believes that the ultimate treatment of these expenditures
and the various matters under litigation will not have a significant 
adverse effect on either the Company's future results of operations or
financial position.

   The Company has operating leases for buildings, vehicles, water meters 
and office equipment.  Rental expenses relating to these leases for the 
years ended December 31, 1996, 1995 and 1994 were approximately 
$1,333,000, $1,344,000, and $1,321,000, respectively.  At December 31, 
1996, minimum future lease payments under noncancelable operating leases 
are $1,158,000 in 1997, $911,000 in 1998, $716,000 in 1999, $511,000 in 
2000, $474,000 in 2001 and $1,458,366 thereafter.

     In March, 1993, an outside contractor spilled a small amount of 
mercury while working at Consumers Ohio's water treatment plant.  
Several areas in and around the plant were contaminated by the spill, 
although no mercury contaminated Consumers Ohio's water supply.  The 
cleanup has been completed at a total cost of approximately 
$900,000.  Consumers Ohio Water has received $100,000 from its insurer and 
has sought recovery of all the cleanup costs from the contractor.  
Management believed it possible that Consumers Ohio would recover 
cleanup costs from the contractor and/or the contractor's insurer and,
therefore, deferred the costs incurred in connection with the spill.  
However, due to the progress of the case and to the expected cost of 
the litigation, Consumers Ohio reserved $375,000 in 1995 for possible 
losses on this claim. In November, 1996, the contractor obtained a 
judgement in its favor, from which Consumers Ohio has appealed.  As a 
result of this adverse judgement, Consumers Ohio increased the 
reserve previously taken to cover the clean up and legal costs by $560,000 
or $370,000, net of taxes. 

Consumers Water Company and Subsidiaries                    
Unaudited Financial Information                                  

Quarterly Financial Data                                    
Unaudited quarterly financial data pertaining to the results of operations for
1996 and 1995 are as follows:                                              
(Dollars in Thousands                 1st        2nd        3rd       4th
Except Per Share Amounts)            Quarter    Quarter    Quarter   Quarter
1996                                              
Operating Revenue                    $25,055     $26,681    $29,349   $26,300 
Operating Income                     $ 6,022     $ 6,517    $ 9,059   $ 2,917
                                     -----------------------------------------
Net Income (Loss):
  Before Gains                       $ 1,738     $ 2,035    $ 3,659  ($   941)
                                     -----------------------------------------
  Total                              $ 1,824     $ 1,640    $ 3,659  ($   872)
                                     -----------------------------------------
Earnings(Loss) Per Share:
  Before Gains                       $  0.20     $  0.25    $  0.42  ($  0.11)
                                     =========================================
  Total                              $  0.21     $  0.19    $  0.42  ($  0.10)
                                     =========================================
1995
Operating Revenue                    $22,530     $25,518    $28,479   $25,246
Operating Income                     $ 4,684     $ 6,396    $10,152   $ 7,012 
                                     -----------------------------------------
Net Income(Loss):
  Before Gains                       $ 1,232     $ 2,170    $ 4,439   $ 2,354 
                                     -----------------------------------------
  Total                              $ 1,595     $ 2,894    $ 4,450   $ 2,364 
                                     -----------------------------------------
Earnings(Loss) Per Share:          
  Before Gains                       $  0.15     $  0.26    $  0.53   $  0.28 
                                     -----------------------------------------
  Total                              $  0.19     $  0.35    $  0.53   $  0.28 
                                     =========================================
The fluctuations in revenue and operating income between quarters reflect the
seasonal nature of the water utility business, changes in industrial usage and
the timing of rate relief.  Operating income in the fourth quarter of 1996 is
also impacted by Consumers Applied Technologies reorganization and other
charges of $2,414,000 net of tax.
    Gains (losses) from the sales of properties of continuing operations, net
of taxes, were $86,000, ($395,000), $0, and $69,000 in the four quarters of
1996 as compared with $363.000, $724,000, $11,000, and $10,000 in 1995.  The
loss of $395,000 recorded in the second quarter of 1996 resulted from the
reversal from a gain of the same amount previously recorded in the fourth
quarter of 1994.

                                                        Schedule II
              CONSUMERS WATER COMPANY AND SUBSIDIARIES

                 VALUATION AND QUALIFYING ACCOUNTS
        FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
                       (Dollars in Thousands)

                               Additions        Deductions
                               ---------        ----------
                  Balance at   Provision                          Balance at
                Beginning of  Charged to                Accounts      End of
Description             Year  Operations  Recoveries   Written Off      Year
----------------------------------------------------------------------------
Allowance for 
Doubtful                      Year Ended December 31, 1996
Accounts                      -----------------------------
                       $ 848      $1,314         $60       $1,108     $1,114
                                                                               
                              Year Ended December 31, 1995
                              -----------------------------
                        $682         $750        $59         $643       $848

                              Year Ended December 31, 1994         
                              -----------------------------
                        $798         $706        $55         $877       $682


-------------------------------------------------------------
ITEM 9.  DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
-------------------------------------------------------------

     None.                               

                             PART III

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

Incorporated by reference are the "Nominees for Election as Directors," 
and "Other Executive Officers" and sections of the Company's Definitive 
Proxy Statement filed pursuant to Regulation 14A.

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

Incorporated by reference is the "Executive Compensation" section of the
Company's Definitive Proxy Statement filed pursuant to Regulation 14A.

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

Incorporated by reference is the "Common Stock Ownership of Certain 
Beneficial Owners and Management" section of the Company's Definitive 
Proxy Statement filed pursuant to Regulation 14A.

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

Incorporated by reference is the "Executive Compensation" section of the
Company's Definitive Proxy Statement filed pursuant to Regulation 14A.

                              PART IV

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

     (a) LIST OF FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS.

                (1)  Consolidated financial statements and notes thereto of
                     Consumers Water Company and its subsidiaries together
                     with the Report of Independent Public Accountants, are
                     listed as part of Item 8 of this Form 10-K.

                (2)  Schedules

                     II   Valuation and Qualifying Accounts for the Years
                          Ended December 31, 1996, 1995 and 1994.

                     All other schedules have been omitted, since they are
                     not required, not applicable or the information is
                     included in the consolidated financial statements or
                     notes thereto.

                (3)  Exhibits

EXHIBITS

3.1        Conformed Copy of Restated Articles of Incorporation of Consumers
           Water Company, as amended, is submitted herewith as Exhibit 3.1.

3.2        Bylaws of Consumers Water Company, as amended March 2, 1994, are
           incorporated by reference to Exhibit 3.2 to Consumers Water
           Company's Annual Report on Form 10-K for the year ended December
           31, 1993.

4.1        Instruments defining the rights of security holders, including
           Indentures. The registrant agrees to furnish copies of instruments
           with respect to long-term debt to the Commission upon request.

10.1*      Consumers Water Company 1988 Incentive Stock Option Plan is
           incorporated by reference to Exhibit 10.2 to Consumers Water
           Company's Annual Report on Form 10-K for the year ended December
           31, 1993.

10.2*      Consumers Water Company 1993 Incentive Stock Option Plan is
           incorporated by reference to Appendix B to definitive proxy
           statement dated April 5, 1993. 

10.3*      Consumers Water Company 1992 Deferred Compensation Plan for
           Directors, Plan A, incorporated by reference to Exhibit 10.5.2 to
           Consumers Water Company's Annual Report on Form 10-K for the year
           ended December 31, 1991.

10.4*      Consumers Water Company 1992 Deferred Compensation Plan for
           Directors, Plan B, incorporated by reference to Exhibit 10.5.3 to
           Consumers Water Company's Annual Report on Form 10-K for the year
           ended December 31, 1991.
                                
10.5       Letter Agreement between Consumers Water Company and Anjou
           International Company dated February 7, 1986, incorporated by
           reference to Exhibit 10.6 to Consumers Water Company's
           Registration Statement on Form S-2 (No. 33-41113), filed with the
           Securities and Exchange Commission on June 11, 1991.

10.6       Assignment of Rights under February 7, 1986 Agreement between
           Consumers Water Company and Anjou International Company to
           Compagnie Generale des Eaux, dated November 12, 1987, incorporated
           by reference to Exhibit 10.7 to Consumers Water Company's Annual
           Report on Form 10-K for the year ended December 31, 1992.

10.7       Form of Indemnification Agreement entered into between Consumers
           Water Company and each of its current directors and executive
           officers, incorporated by reference to Exhibit 10.8 to Consumers
           Water Company's Quarterly Report on Form 10-Q for the quarter
           ended June 30, 1994.

10.8*      Consumers Water Company Executive Severance Plan is incorporated
           by reference to exhibit 10.9 to Consumers Water Company's Annual
           Report on Form 10K for the year ended December 31, 1995.

10.9*      Consumers Water Company's Senior Management Long-term Incentive
           Plan is incorporated by reference to Appendix A to the Company's
           definitive Proxy Statement dated March 29, 1996.

11.        Statement of Computation of Per Share Earnings is submitted
           herewith as Exhibit 11.

21.        List of Subsidiaries of the Registrant is submitted herewith as
           Exhibit 21.

23.        Consent of Arthur Andersen LLP is submitted herewith as Exhibit
           23.

27.        Financial Data Schedule is submitted herewith as Exhibit 27.

-------------------------------
*          Management contract or compensatory plan or arrangement required
           to be filed as an Exhibit pursuant to Item 14(c) of Form 10-K.

           (b) REPORTS ON FORM 8-K.

On November 8, 1996, Consumers Water Company filed a Form 8-K with the
Securities and Exchange Commission reporting, under item 5 thereof, the 
entry of an adverse judgment with respect to claims brought by its 
subsidiary, Consumers Ohio Water Company, against a contractor to recover 
the costs of clean-up of a mercury spill at on of the subsidiary's
treatment plants.

                      CONSUMERS WATER COMPANY

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.


By:   /s/ Peter L. Haynes                            3/10/97       
   -----------------------                        -----------------
   Peter L. Haynes                                      Date       
   President and Director
   (Chief Executive 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/ John F. Isacke                             3/10/97       
   -----------------------                         -----------------
   John F. Isacke                                       Date       
   Senior Vice President 
   (Chief Financial Officer)

By:   /s/ Gary E. Wardwell                           3/10/97       
   --------------------------                      ----------------
   Gary E. Wardwell                                     Date       
   Controller
   (Chief Accounting Officer)

By:   /s/ David R. Hastings, II                      3/10/97       
   --------------------------                      ----------------
   David R. Hastings, II                                Date       
   Chairman and Director

By:   /s/ Jack S. Ketchum                            3/10/97
   --------------------------                      ----------------       
   Jack S. Ketchum                                      Date       
   Director

By:   /s/ John E. Menario                            3/10/97
   --------------------------                      ----------------       
   John E. Menario                                      Date       
   Director

By:   /s/ Jane E. Newman                             3/10/97
   --------------------------                      ----------------
   Jane E. Newman                                       Date       
   Director

By:   /s/ John E. Palmer, Jr.                        3/10/97
   --------------------------                      ----------------       
   John E. Palmer, Jr.                                  Date       
   Director

By:   /s/ Elaine D. Rosen                            3/10/97
   --------------------------                      ----------------
   Elaine D. Rosen                                       Date      
   Director

By:   /s/ William B. Russell                         3/10/97       
   ---------------------------                     -----------------       
   William B. Russell                                    Date      
   Director

By: /s/ John H. Schiavi                              3/10/97       
   ----------------------------                    -----------------       
   John H. Schiavi                                      Date       
   Director

By:   /s/ Peter L. Haynes                            3/10/97       
   ----------------------------                    -----------------       
   Peter L. Haynes                                      Date       
   President and Director
   (Chief Executive Officer)


                           EXHIBIT INDEX                              
Exhibit

3.1     Conformed Copy of Restated Articles of Incorporation of Consumers

        Water Company, as amended, is submitted herewith as Exhibit 3.1.

3.2     Bylaws of Consumers Water Company, as amended March 2, 1994, are
        incorporated by reference to Exhibit 3.2 to Consumers Water 
        Company's Annual Report on Form 10-K for the year ended December 31,
        1993.

4.1     Instruments defining the rights of security holders, including
        Indentures. The registrant agrees to furnish copies of instruments
        with respect to long-term debt to the Commission upon request.

10.1*   Consumers Water Company 1988 Incentive Stock Option Plan is
        incorporated by reference to Exhibit 10.2 to Consumers Water
        Company's Annual Report on Form 10-K for the year ended December 31,
        1993.

10.2*   Consumers Water Company 1993 Incentive Stock Option Plan is
        incorporated by reference to Appendix B to definitive proxy statement
        dated April 5, 1993. 

10.3*   Consumers Water Company 1992 Deferred Compensation Plan for
        Directors, Plan A, incorporated by reference to Exhibit 10.5.2 to
        Consumers Water Company's Annual Report on Form 10-K for the year
        ended December 31, 1991.

10.4*   Consumers Water Company 1992 Deferred Compensation Plan for
        Directors, Plan B, incorporated by reference to Exhibit 10.5.3 to
        Consumers Water Company's Annual Report on Form 10-K for the year
        ended December 31, 1991.

10.5    Letter Agreement between Consumers Water Company and Anjou
        International Company dated February 7, 1986, incorporated by
        reference to Exhibit 10.6 to Consumers Water Company's Registration
        Statement on Form S-2 (No. 33-41113), filed with the Securities and
        Exchange Commission on June 11, 1991.

10.6    Assignment of Rights under February 7, 1986 Agreement between
        Consumers Water Company and Anjou International Company to Compagnie
        Generale des Eaux, dated November 12, 1987, incorporated by reference
        to Exhibit 10.7 to Consumers Water Company's Annual Report on Form
        10-K for the year ended December 31, 1992.

10.7    Form of Indemnification Agreement entered into between Consumers
        Water Company and each of its current directors and executive
        officers, incorporated by reference to Exhibit 10.8 to Consumers
        Water Company's Quarterly Report on Form 10-Q for the quarter ended
        June 30, 1994.

10.8    Consumers Water Company Executive Severance Plan is incorporated by
        reference to exhibit 10.9 to Consumers Water Company's Annual Report
        on Form 10K for the year ended December 31, 1995.

10.9    Consumers Water Company's Senior Management Long-term Incentive Plan
        is incorporated by reference to Appendix A to the Company's
        definitive Proxy Statement dated March 29, 1996.

11.     Statement of Computation of Per Share Earnings is submitted herewith
        as Exhibit 11.

21.     List of Subsidiaries of the Registrant is submitted herewith as
        Exhibit 21.

23.     Consent of Arthur Andersen LLP is submitted herewith as Exhibit 23.

27.     Financial Data Schedule is submitted herewith as Exhibit 27.

------------------------------------------
*       Management contract or compensatory plan or
        arrangement required to be filed as an Exhibit
        pursuant to Item 14(c) of Form 10-K.

                                                                 EXHIBIT 3.1

                   RESTATEMENT OF ARTICLES OF INCORPORATION
                                      OF
                            CONSUMERS WATER COMPANY
                                [CONFORMED COPY]


     FIRST:  The name of the Company is CONSUMERS WATER COMPANY and it is
located at Portland, Maine.

     SECOND:  The name of its Clerk and the address of its registered office
are:

          Name:               Brian R. Mullany
          Street & Number:    Three Canal Plaza
          City:               Portland, Maine 04112

     THIRD:  All purposes and powers allowed by the Maine Business
Corporation Act are adopted as the purposes and powers of the Company.

     FOURTH:  The Board of Directors is authorized to increase or decrease
the number of directors.  The minimum number shall be five directors, and the
maximum number shall be seventeen directors.

     FIFTH:  There shall be two or more classes of shares.  The information
required by Section 403 of the Maine Business Corporation Act concerning each
such
class is set out in Article SEVENTH below.

                             SUMMARY

     The aggregate par value of all authorized shares (of all classes) having
a par value is $18,000,000.  The total number of authorized shares (of all
classes) without par value is 120,000 shares.

     SIXTH:  Meetings of the shareholders may be held outside the State of
Maine.

     SEVENTH:  Provisions concerning the shares of the Company are:

     I.   There are no pre-emptive rights.

     II.  The total number of shares which the Company is authorized to
issue is 120,000 preferred shares having no par value, 15,000,000 common
shares, par value $1.00 per share, and 30,000 preferred shares, par value
$100.00 per share.

          (a)  Preferred Shares, Par Value $100.00 Per Share.  The 
                 preferred shares, par value $100.00 per share, shall have 
                 the following designations, preferences, priorities, 
                 rights, voting powers, restrictions, limitations,
                 qualifications and covenants:

               1.  Cumulative Preferred Stock, Series A.  Of the total
             authorized 30,000 preferred shares of the par value of $100.00
             per share, 15,925 shares thereof shall be designated as
             Cumulative Preferred Stock, Series A.

                    A.  The Cumulative Preferred Stock, Series A, shall 
                  be entitled when and as declared by the Board of Directors
                  in its discretion, out of consolidated earned surplus or
                  retained earnings, but before any dividends are paid on the
                  common shares, to quarterly cumulative dividends from the
                  day of issue thereof at the annual rate of five and one-
                  quarter percent (5 1/4%) of the par value of $100.00 per
                  share, and no more, payable on the first days of January,
                  April, July and October.

                    B.  Upon at least thirty (30) days' notice given by
                  mail to the record holders thereof at their address as it
                  appears on the books of the Company, or in the absence of
                  any such address, at their last known address, the Company,
                  by vote of the Board of Directors, except as herein
                  otherwise provided, may on any dividend date out of any
                  funds legally available therefor redeem the whole or any
                  part of the Cumulative Preferred Stock, Series A, at one
                  hundred five per centum (105%) of the par value thereof, if
                  allowed by law, together with an amount equal to dividends
                  accrued on the dividend date on which the redemption is made
                  and all the accumulated dividends, if any; such redemption
                  shall, except as herein provided, be made in such manner as
                  shall be determined from time to time by resolution of the
                  Board of Directors, by the bylaws and by law.  Any such
                  redemption of a part only of the outstanding Cumulative
                  Preferred Stock, Series A, may be made either by lot or pro
                  rata as determined by the Board of Directors.  No redemption
                  of less than all the outstanding Cumulative Preferred Stock,
                  Series A, shall be made while any dividends accumulated on
                  the Cumulative Preferred Stock, Series A, shall remain
                  unpaid.  Notice of redemption having been given as herein
                  provided, unless default be made in the payment of the
                  redemption price in pursuance of such notice, dividends
                  shall cease to accrue upon such shares so called for
                  redemption from and after the date fixed for redemption, and
                  the shares so redeemed shall be deemed to have been retired
                  and the holders of the certificate therefor shall be
                  entitled in respect of their certificates only to the
                  payment of the redemption price.

                    C.  In the event of any liquidation or dissolution, or
                  winding up of the Company, whether voluntary or involuntary,
                  the holders of the Cumulative Preferred Stock, Series A,
                  shall be entitled before any distribution shall be made to
                  the holders of the common shares, to be paid in full the par
                  value of their shares, plus an amount equal to all dividends
                  accrued and accumulated to date of payment, but upon such
                  payment the Cumulative Preferred Stock, Series A, shall not
                  participate further in any distribution of the Company's
                  assets.

                    D.  No right to subscribe for or take any shares of
                  any class, or securities convertible into shares, now or
                  hereafter authorized or issued whether by additional issues,
                  share dividends, splits or otherwise, whether preferred or
                  common, shall appertain to the Cumulative Preferred Stock,
                  Series A.

                    E.  Each share of the Cumulative Preferred Stock,
                  Series A, shall have voting power for all purposes equal
                  with, but no greater than, each common share, having one
                  vote per share notwithstanding any increase in the common
                  shares outstanding whether by additional issue, share
                  dividends, share rights or otherwise.

               2.  Remainder of Authorized Preferred Shares, Par Value
            $100.00 Per Share.  The remainder of the authorized preferred
            shares, par value $100.00 per share, may be issued in whole or in
            part from time to time by resolution of the Board of Directors as
            additional series or as additional shares of any series of
            preferred shares, par value $100.00 per share, with such
            variations in (i) the rate of dividend, and whether it is to be
            cumulative, (ii) whether shares may be redeemed and, if so, the
            redemption price and the terms and conditions of redemption, (iii)
            the amount payable upon shares in event of voluntary or
            involuntary liquidation, (iv) sinking fund provisions, if any, for
            the redemption of purchase of shares, (v) the terms and
            conditions, if any, on which shares may be converted, and (vi) the
            voting rights, if any, as shall be stated and expressed in the
            resolution providing for the issuance of such new series;
            provided, however, that no series of preferred shares, par value
            $100.00 per share, shall rank senior to the Cumulative Preferred
            Stock, Series A, with respect to priority in payment of dividends
            and the distribution of assets upon liquidation, and that all
            series of preferred shares, par value $100.00 per share, shall
            rank equally on a pro rata basis with all series of preferred
            shares having no par value with respect to all rights, preferences
            and limitations except those specified above.

          b.  Preferred Shares Having No Par Value.  The authorized
      preferred shares having no par value may be issued in whole or in part
      from time to time by resolution of the Board of Directors, as additional
      series or as additional shares of any series of preferred shares having
      no par value with such variations in (i) the rate of dividends and
      whether it is to be cumulative, (ii) whether shares may be redeemed and,
      if so, the redemption price and the terms and conditions of redemption,
      (iii) the amount payable upon shares in event of voluntary or
      involuntary liquidation, (iv) sinking fund provisions, if any, for the
      redemption or purchase of shares, (v) the terms and conditions, if any,
      on which shares may be converted, and (vi) the voting rights, if any, as
      shall be stated and expressed in the resolution providing for the
      issuance of such new series; provided, however, that no series of
      preferred shares having no par value shall rank senior to the Cumulative
      Preferred Stock, Series A, with respect to priority in payment of
      dividends and the distribution of assets upon liquidation, and that all
      series of preferred shares having no par value shall rank equally on a
      pro rata basis with all series of preferred shares, par value $100.00
      per share, with respect to all rights, preferences and limitations
      except those specified above.

          c.  Common Shares.  Except as limited in these Articles, the
      common shares shall be entitled to dividends when and as declared by the
      Board of Directors in its discretion and, together with such preferred
      shares as may have voting rights, shall have voting power for all
      purposes.
     
     EIGHTH:  The Company is authorized to purchase its own shares to the
extent of unreserved and unrestricted capital surplus and unreserved and
unrestricted earned surplus.

     NINTH:  Dividends payable in the shares of any class may be paid to the
holders of shares of the same or of any other class, except as otherwise
provided in Article SEVENTH hereof.

     TENTH: 1.  The affirmative vote or consent of the holders of ninety-five
percent (95%) of all shares of stock of the Company entitled to vote in
elections of Directors, considered for the purposes of this Article TENTH as
one class, shall be required for the adoption or authorization of a business
combination (as hereinafter defined) with any other entity (as hereinafter
defined) if, as of the record date for the determination of stockholders
entitled to notice thereof and to vote thereon or consent thereto, such other
entity is the beneficial owner, directly or indirectly, of thirty percent
(30%) of more of the then outstanding voting shares of the Company, considered
for the purposes of this Article TENTH as one class; provided that such
ninety-five percent (95%) voting requirement shall not be applicable if:

          a.  The cash, or fair market value of other consideration, to be
      received per share by common shareholders of the Company in such
      business combination bears the same or a greater percentage relationship
      to the market price of the Company's common shares immediately prior to
      the announcement of such business combination as the highest per share
      price (including brokerage commissions and/or soliciting dealers' fees)
      which such other entity has theretofore paid for any of the common
      shares of the Company already owned by it bears to the market price of
      the common shares of the Company immediately prior to the commencement
      of acquisition of the Company's common shares by such other entity;

          b.  The cash, or fair market value of other consideration, to be
      received per share by common shareholders of the Company in such
      business combination (i) is not less than the highest per share price
      (including brokerage commissions and/or soliciting dealers' fees) paid
      by such other entity in acquiring any of its holdings of the Company's
      common shares, and (ii) is not less than the earnings per common share
      of the Company for the four full consecutive fiscal quarters immediately
      preceding the record date for solicitation of votes on such business
      combination, multiplied by the then price/earnings multiple (if any) of
      such other entity as customarily computed and reported in the financial
      community;

          c.  After such other entity has acquired thirty percent (30%) or
      more of the then outstanding voting shares of the Company, considered
      for the purposes of this Article TENTH as one class, and prior to the
      consummation of such business combination: (i) such other entity shall
      have taken steps to insure that the Company's Board of Directors
      included at all times representation by continuing Director(s) (as
      hereinafter defined) proportionate to the shareholdings of the Company's
      public common shareholders not affiliated with such other entity (with a
      continuing Director to occupy any resulting fractional board position);
      (ii) there shall have been no reduction in the rate of dividends payable
      on the Company's common shares except as necessary to insure that a
      quarterly dividend payment does not exceed 15% of the net income of the
      Company for the four full consecutive fiscal quarters immediately
      preceding the declaration date of such dividend, or except as may have
      been approved by a unanimous vote of the Directors; (iii) such other
      entity shall not have acquired any newly issued shares of stock,
      directly or indirectly, from the Company (except upon conversion of
      convertible securities acquired by it prior to obtaining its thirty
      percent (30%) or more of the then outstanding voting shares of the
      Company, considered for purposes of this Article TENTH as one class, or
      as a result of a pro rata stock dividend or stock split); and (iv) such
      other entity shall not have acquired any additional common shares of the
      Company or securities convertible into common shares except as a part of
      the transaction which results in such other entity acquiring its thirty
      percent (30%) or more of the then outstanding voting shares of the
      Company, considered for purposes of this Article TENTH as one class;

          d.  Such other entity shall not have (i) received the benefit,
      directly or indirectly (except proportionately as a shareholder) of any
      loans, advances, guarantees, pledges or other financial assistance or
      tax credits provided by the Company, or (ii) made any major change in
      the Company's business or equity capital structure without the unanimous
      approval of the Directors, in either case prior to the consummation of
      such business combination; and

          e.  A proxy statement responsive to the requirements of the
      Securities Exchange Act of 1934 shall be mailed to public shareholders
      of the Company for the purpose of soliciting shareholder approval of
      such business combination and shall contain at the front thereof, in a
      prominent place, any recommendations as to the advisability (or
      inadvisability) of the business combination which the continuing
      Directors, or any of them, may choose to state and, if deemed advisable
      by a majority of the continuing Directors, an opinion of a reputable
      investment banking firm as to the fairness (or not) of the terms of such
      business combination, from the point view of the remaining public
      shareholders of the Company (such investment banking firm to be selected
      by a majority of the continuing Directors and to be paid a reasonable
      fee for their services by the Company upon receipt of such opinion).

     The provisions of this Article TENTH shall also apply to a business
combination with any other entity which at any time has been the beneficial
owner, directly or indirectly, of thirty percent (30%) or more of the
outstanding voting shares of the Company, considered for the purposes of this
Article TENTH as one class, notwithstanding the fact that such other entity
has reduced its holdings of voting shares below such thirty percent (30%) if,
as of the record date for the determination of shareholders entitled to notice
of and to vote on or consent to the business combination, such other entity is
an "affiliate" of the Company (as hereinafter defined).

     2.  As used in this Article TENTH, (a) the term "other entity" shall
include any corporation, person or other entity and any other entity with
which it or its "affiliate" or "associate" (as defined below) has any
agreement, arrangement or understanding, directly or indirectly, for the
purpose of acquiring, holding, voting or disposing of stock of the Company, or
which is its "affiliate" or "associate" as those terms are defined in Rule
12b-2 of the General Rules and Regulations under the Securities Exchange Act
of 1934 as in effect on January 1, 1982, together with the successors and
assigns of such persons in any transaction or series of transactions not
involving a public offering of the Company's stock within the meaning of the
Securities Act of 1933; (b) an other entity shall be deemed to be the
beneficial owner of any shares of stock of the Company which the other entity
(as defined above) has the right to acquire pursuant to any agreement, or upon
exercise of conversion rights, warrants or options, or otherwise; (c) the
outstanding shares of any class of stock of the Company shall include shares
deemed owned through application of clause (b) above but shall not include any
other shares which may be issuable pursuant to any agreement, or upon exercise
of conversion rights, warrants or options, or otherwise; (d) the term
"business combination" shall include any merger or consolidation of the
Company with or into any other entity, or the sale or lease of all or any
substantial part of the assets of the Company to any other entity, or any sale
or lease to the Company or any subsidiary thereof in exchange for securities
of the Company of any assets (except assets having an aggregate fair market
value of less than $1,000,000) of any other entity; (e) the term "continuing
Director" shall mean a person who was a member of the Board of Directors of
the Company elected by the public shareholders prior to the time that such
other entity acquired in excess of ten percent (10%) of the voting shares of
the Company, considered for the purposes of this Article TENTH as one class,
or a person recommended to succeed a continuing Director by a majority of
continuing Directors; and (f) for the purposes of subparagraphs l(a) and (b)
of this Article TENTH the term "other consideration to be received" shall mean
common shares of the Company retained by its existing public shareholders in
the event of a business combination with such other entity in which the
Company is the surviving corporation.

     3.  A majority of the continuing Directors shall have the power to
determine for the purposes of this Article TENTH on the basis of information
known to them whether (a) such other entity beneficially owns, directly or
indirectly, thirty percent (30%) or more of the outstanding voting shares of
the Company, considered for the purposes of this Article TENTH as one class,
(b) an other entity is an "affiliate" or "associate" (as defined above) of
another, (c) an other entity has an agreement, arrangement or understanding
with another, or (d) the assets being acquired by the Company, or any
subsidiary thereof, have an aggregate fair market value of less than
$1,000,000.

     4.  No amendment to the Articles of Incorporation of the Company shall
amend, alter, change or repeal any of the provisions of this Article TENTH,
unless the amendment effecting such amendment, alteration, change or repeal
shall receive the affirmative vote or consent of the holders of ninety-five
percent (95%) of all outstanding voting shares of the Company, considered for
the purposes of the Article TENTH as one class; provided that this paragraph 4
shall not apply to, and such ninety-five percent (95%) vote or consent shall
not be required for, any amendment, alteration, change or repeal recommended
to the shareholders by the Board of Directors of the Company, provided,
however, that at least eighty percent (80%) of the Directors vote in favor of
such recommendation, and provided further that at least eighty percent (80%)
of the Directors are persons who would be eligible to serve as "continuing
Directors" within the meaning of paragraph 2 of this Article TENTH.

     5.  Nothing contained in this Article TENTH shall be construed to
relieve any other entity from any fiduciary obligation imposed by law.


                              EXHIBITS
                                                         EXHIBIT 11
           Statement of Computation of Per Share Earnings

                                                                               
                                           Years Ended December 31,       
                                  ---------------------------------------
                                  1996             1995              1994
                                  ---------------------------------------   
                                (Amounts in Thousands except per share data)

PRIMARY

Weighted average number of
 shares outstanding               8,625            8,385             8,160
Net effect of dilutive common
 stock equivalents                    3                3                 1
Weighted average
 primary shares                   8,628            8,388             8,161
Net income                      $ 6,251        $  11,303         $  10,000
Preferred dividends                 (55)             (56)              (56)
Earnings applicable
 to common shares               $ 6,196        $  11,247         $   9,944
Primary earnings per
  common share                  $  0.72        $    1.34         $    1.22
           
FULLY DILUTED

Weighted average number of  
 shares outstanding               8,625            8,385            8,160
Net effect of dilutive common
  stock equivalents                   4                3                2
Weighted average fully
  diluted shares                  8,629            8,388            8,162
Earnings applicable to
  common shares                 $ 6,196         $ 11,247         $  9,944
Fully diluted earnings 
  per common share              $  0.72         $   1.34         $   1.22


EXHIBIT 21
                     Subsidiaries of Registrant
                         December 31, 1996
                                                              Percentage
                                                                  Voting
                        State in Which     Year Acquired      Securities
Name of Subsidiary        Incorporated         or Formed           Owned  
-------------------------------------------------------------------------

BHNE Liquidating Corp., 
  Inc.                        Maine              1983             100.0%


Consumers Maine Water 
  Company                     Maine              1959              99.0%

Consumers Illinois Water 
  Company                     Illinois           1926             100.0%

Consumers Applied 
  Technologies, Inc.          Maine              1984             100.0%
 (and its wholly owned 
  subsidiary EnviroAudit)

Consumers Land Management 
  Co.                         Maine              1984             100.0%

Consumers New Jersey Water 
  Company                     New Jersey         1969              96.8%
 
Consumers Ohio Water 
  Company                     Ohio               1973             100.0%

Consumers Pennsylvania Water 
  Company
 --  Susquehanna Division     Pennsylvania       1971              94.9%
 --  Roaring Creek Division   Pennsylvania       1985             100.0%
 --  Shenango Valley Division 
      (and its wholly-        Pennsylvania       1926             100.0%
       owned subsidiary, 
       Masury Water Company)  Ohio               1926             100.0%

Consumers New Hampshire 
  Water Company, Inc.         New Hampshire      1930             100.0%

                                                         Exhibit 23

             CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS


As independent public accountants, we hereby consent to the incorporation 
of our report dated February 5, 1997, included in this Form 10-K, into 
the Company's previously filed Registration Statements (Form S-3 No. 
33-59375 and Forms S-8 Nos. 33-68858, 33-20994, 33-22032 and 33-57618 and 
333-19821). 

                                                   /s/  Arthur Andersen LLP
                                                   ------------------------
                                                        Arthur Andersen LLP

Boston Massachusetts
March 10, 1997